U.S. SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC. 20549
                                  FORM 10-KSB
                                  -----------

            [x] Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                  For the fiscal year ended September 30, 1997

                                       or

               [ ] Transition Report under Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

                         Commission file number 0-22388

                               EIF HOLDINGS, INC.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

              Hawaii                                   99-0273889
  -------------------------------                  ------------------
  (State or other jurisdiction of                   (I.R.S. Employer
   incorporation or organization)                  Identification No.)


    53 Stiles Road, Suite 101
           Salem, NH                                      03079
    -------------------------                          ----------
      (Address of principal                            (Zip Code)
        executive offices)

                                 (603) 890-3680
                 -----------------------------------------------
                (Issuer's telephone number, including area code)

          Securities registered under Section 12(b)of the Exchange Act:
                                      None

          Securities registered under Section 12(g)of the Exchange Act:
                                 Common Stock,
          -------------------------------------------------------------
                                (Title of Class)

     Check  whether  the Issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  Registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.
YES          NO    X
    -------     -------

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of Regulation S-B is not contained in this form,  and no disclosure  will be
contained,  to the  best of  Registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.[ ]

     State Issuer's revenues for its most recent fiscal year: $13,434,423

State the  aggregate  market  value of the voting  stock held by  non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days:  December 31, 1997:  $7,276,372  (15,818,201  shares held by persons other
than  affiliates)  at an  average of the high and low bid and high and low asked
price $.46 as reported by the National Quotation Bureau, Inc.

     The  Number of shares of Common  Stock  outstanding  at  December 31, 1997:
24,618,201.

     Transitional Small Business Disclosure Format (Check one):
YES          NO    X
    -------     -------

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<PAGE>
                                EIF HOLDINGS INC.

                                Table of Contents

PART I.                                                                    Page

Item 1.  DESCRIPTION OF BUSINESS..........................................   3

Item 2.  DESCRIPTION OF PROPERTY..........................................  14 

Item 3.  LEGAL PROCEEDINGS................................................  15

Item 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS................  15


PART II.

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS..............................................  16

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS..........................................  17

Item 7.  FINANCIAL STATEMENTS.............................................  21


Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE.......................................  37


PART III.

Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT...............  37

Item 10. EXECUTIVE COMPENSATION...........................................  37

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...  37

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................  37

Item 13. EXHIBITS AND REPORTS ON FORM 8-K.................................  38

         SIGNATURES.......................................................  42


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PART 1
Item 1.  DESCRIPTION OF BUSINESS

GENERAL

EIF Holdings, Inc. (the "Company" or "EIF") was formed in the State of Hawaii in
1989. Until May 1997, EIF was primarily  engaged in  environmental  construction
related industries,  more specifically,  asbestos abatement, both commercial and
residential, lead removal, and soil and groundwater remediation. The Company was
also involved,  to a limited extent,  in the energy management  business.  These
activities, in particular the commercial asbestos abatement business, involved a
high  percentage  of relatively  large,  fixed-price  contracts  under which the
Company assumed  significant  financial risks.  Over the past three fiscal years
the Company incurred substantial losses on a number of major contracts.

In May  1997,  Frank J.  Fradella was elected  President and CEO of the Company.
Mr. Fradella had previously served as Vice President and Chief Operating Officer
of  American  Eco  Corporation  ("AEC"),  an  Ontario  corporation  and a  major
shareholder of the Company . Shortly after his  appointment,  Mr. Fradella began
implementation of a plan intended to stabilize the Company's  financial position
and provide it with the  financial  resources  necessary to allow  management to
pursue a new strategic  direction.  This new strategic direction would focus the
Company's  activities  in the  specialized  maintenance  industry,  an  industry
characterized by a predominance of cost-plus contracts, credit worthy industrial
customers and  significant  repeat  business.  Mr.  Fradella's plan included the
elimination of  unprofitable  operations,  reductions in the Company's  overhead
costs,  recapitalization  of the  Company's  balance  sheet and  attracting  new
capital to support  acquisitions in the  specialized  maintenance  industry.  As
described further herein, implementation of the plan is well underway.

The  primary   businesses  of  EIF  have  been  acquired  through  a  series  of
acquisitions.  In January 1993, the Company acquired,  in a reverse acquisition,
all of the shares of P.W. Stephens Contractors,  Inc., ("P.W.  Stephens").  P.W.
Stephens was founded as a California  corporation in 1982 and was engaged in the
environmental  contracting  industry,  primarily  focusing  on  the  removal  of
materials containing asbestos, but also offering lead hazard removal, insulation
and other hazardous  materials clean-up  services.  Services were offered to the
commercial,  industrial and  institutional  markets,  primarily in the states of
California,  Hawaii and Nevada.  These  operations  were  conducted out of seven
branch offices located throughout the service area. Services were and still are,
offered  to  the  residential   market  in  California   through  P.W.  Stephens
Residential,  Inc. ("Residential"),  a California corporation and a wholly-owned
subsidiary  of P. W.  Stephens.  In the  fourth  quarter  of 1996,  the  Company
acquired the assets of QHI,  Inc., a California  corporation  out of bankruptcy.
QHI provided  asbestos  abatement  services to the  commercial,  industrial  and
institutional markets.  The assets of QHI were merged into QHI Stephens, Inc., a
California  corporation and a wholly owned subsidiary of P.W.  Stephens.   P. W.
Stephens also has two other subsidiaries,  Environmental  Supply, Inc. and P. W.
Stephens  Construction,  Inc. which are inactive.  The Company  currently has no
intention of conducting any material activities through these entities.

The Company's  commercial  asbestos  operations  generated operating losses over
each  of the  last  three  fiscal  years.  As part of  management's  efforts  to
eliminate unprofitable operations, all of the operations of P. W. Stephens, with
the exception of P.W.  Stephens  Residential,  Inc.,  were  discontinued  by the
Company in May 1977.

In August,  1994, as part of a strategy of expanding  geographic  presence,  the
Company acquired VonGuard  Holdings,  Inc.  ("Vonguard"),  and its subsidiaries.
VonGuard was formed as a Missouri corporation in 1992, by Kenneth Vonderahe,  as
a holding  company  to  acquire  FCA  Services,  Inc.  ("FCA")  and  Remediation
Services,  Inc. ("RSI"). FCA had been in business since 1987 and RSI since 1989.
In June  1996,  VonGuard  and  Enstar-North  American,  Inc.,  a  subsidiary  of
VonGuard,  were  merged into FCA and the name of the entity was changed to P. W.
Stephens Services,  Inc.,  a  Missouri  corporation.  At the same  time,  Select
Abatement,  Inc., a subsidiary of VonGuard,  was merged into RSI and the name of
that  entity  was  changed  to P. W.  Stephens  Contractors,  Inc.,  a  Missouri
corporation.  P.W. Stephens Services, Inc. and P. W. Stephens Contractors,  Inc.
(Missouri) are collectively  referred to as "P. W. Stephens - St. Louis" or "St.
Louis". P. W. Stephens - St Louis provides  industrial  cleaning and remediation
services,  including  soil  and  groundwater  remediation,  hazardous  materials
management and clean-up,  asbestos abatement and lead hazard removal service, to
clients, primarily located in the Midwest.

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In December  1994,  the Company  acquired  Kelar  Controls,  Inc.  ("Kelar"),  a
California  corporation.  Kelar  primarily  installs new or  retrofitted  energy
management  controls and conservation  equipment for large storage and warehouse
facilities.  Typically,  these  projects  impact  lighting  or  heating  and air
conditioning  systems.  Kelar also  provides  intrusion  and  building  security
devices.  The projects  generally require an initial capital outlay by Kelar and
Kelar  typically  receives  revenues  based on a  percentage  of energy  savings
realized.  Management  of  EIF  determined  that  Kelar's  operations  were  not
consistent  with the strategic  direction of the Company and as a result,  Kelar
was sold to Regal Oak Properties, Inc. effective June 30, 1997. In exchange, the
Company accepted a one-year $2,500,000 note bearing interest of 10%.

During late fiscal 1995 and early fiscal 1996, American Eco Corporation ("AEC"),
began   purchasing   shares  of  the  Company's   common  stock.   AEC  provides
construction, management, maintenance, demolition, engineering and environmental
remediation services in the refining,  petrochemical,  utility,  forest products
and offshore manufacturing industries.  The common stock of AEC is quoted on the
NASDAQ National Market under the symbol ECGOF and is traded on the Toronto Stock
Exchange under the symbol ECX.

In February 1996, AEC agreed to purchase an additional  10,000,000 shares of the
of the Company's  common stock for a purchase  price of  $1,000,000,  subject to
shareholder  approval  of  an  increase  in  the  number  of  authorized  shares
outstanding. The Company's shareholders have not yet held a meeting to vote upon
such approval,  although it is anticipated that such a meeting will be called in
the second  quarter of fiscal  1998.  At the same time,  AEC agreed to provide a
management  team,  primarily  comprised  of  AEC  managers,  to  assist  in  the
management  of EIF. In  connection  therewith,  Richard  Austin  stepped down as
Chairman  of the Board and Chief  Executive  Officer of the  Company and Kenneth
Vonderahe  resigned as a Director of the Company and President of VonGuard.  The
two  vacancies  on the  Board of  Directors  were  filled  by Ronald K. Mann who
assumed the position of Chairman of the Company,  and Michael E.  McGinnis,  who
also became President and CEO of the Company. Mr. Mann was a Director of AEC and
Mr. McGinnis is a Director,  as well as President and CEO of Eco. In March 1996,
AEC agreed to loan money to the Company  pursuant to a Line of Credit  Agreement
with a maximum  borrowing amount of $5,250,000 and bearing interest at a rate of
2% over the prime rate. In August 1996,  David Norris was hired as President and
CEO of the Company,  and remained in such  positions  through April 1997 when he
became Vice President and Chief  Financial  Officer of AEC. Mr. Norris  replaced
Mr.  Mann as a Director  and Mr.  McGinnis  became  Chairman  of the  Board.  In
November of 1996, AEC acquired  4,000,000  shares of the Company's  common stock
from  Julbin  International,  Ltd.  ("Julbin"),  pursuant  to a  stock  purchase
agreement.

In May 1997, Mr. Fradella succeeded Mr. Norris as President, CEO and Director of
the Company.  Shortly after his  appointment,  with the support of AEC, he began
implementing the new strategic plan to improve the Company's financial position.
In May, the P. W. Stephens  commercial  asbestos  operations were  discontinued.
Also in May, substantial reductions were made in administrative  staffing levels
and  overhead  costs  of  the  remaining  operations  so  as to  position  those
operations to generate  positive cash flow.  In October 1997,  Mr.  Fradella was
named Chairman of the Company.

In September,  AEC agreed to provide additional capital to EIF Holdings in order
to allow it to meet  certain  of its  existing  obligations.  AEC  extended  the
maturity of the Line of Credit  Agreement to February 28, 1998 and increased the
Maximum  Borrowing  Amount to  $20,000,000.  AEC also  agreed,  in  concept,  to
convert,  at an appropriate time, the amounts owed to it by EIF to shares of the
Common Stock of the Company.  The terms of the  conversion  are currently  being
negotiated,  however, prior to any exchange of part or all of the line of credit
to common  stock,  the terms must be  finalized  and the  Company  must  receive
shareholder  approval to increase its authorized  number of outstanding  shares.
There is no  assurance  that these can be  achieved.  

In November 1997, EIF completed the acquisition of J.L. Manta,  Inc.  ("Manta"),
an Illinois  corporation,  which  provides  specialty  coatings  and  industrial
maintenance services.  (See FORM 8K dated November 29, 1997.) Consideration paid
by the EIF included $4,725,321 of cash and $2,235,312 of convertible  promissory
notes, payable in installments, with the final payment due on November 18, 2000.
The Company also entered into Retention Bonus Agreements with key Manta managers
providing for bonus payments  aggregating  $900,000 over a three-year period and
committed to provide 500,000 options to purchase EIF stock to Manta employees.

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At  September  30,  1997,  AEC owned an  aggregate  of  8,800,000  shares of the
Company's  Common  Stock.  On December  22, 1997,  AEC granted Mr.  Fradella the
option to purchase those shares at a price of $.65 per share,  excerciseable for
a period  of one year  from the  date of the  agreement.  See ITEM 11  "SECURITY
OWNERSHIP  OF CERTAIN  BENEFICIAL  OWNERS AND  MANAGEMENT"  and ITEM 12 "CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."


SERVICES PROVIDED BY SUBSIDIARIES:

P.W. STEPHENS RESIDENTIAL

P.W.  Stephens  Residential  is  primarily  engaged in the  business of asbestos
removal  from  residential  buildings.  It also  provides  lead  hazard  removal
services and insulation services. The work is generally performed under time and
material contracts and fixed-price contracts. P.W. Stephens Residential provides
these  environmental  services  through  its three  branch  offices  located  in
California.

P.W. STEPHENS ST. LOUIS 

P.W.  Stephens St.  Louis  provides  its  environmental  services  through  its
subsidiaries P.W. Stephens Services,  Inc. and P.W. Stephens  Contractors,  Inc.
P.W. Stephens Services, Inc. provides asbestos abatement and lead hazard removal
for commercial,  industrial,  governmental, and residential clients primarily in
the Midwestern states of Illinois,  Missouri,  Iowa, and Nebraska. P.W. Stephens
Contractors,  Inc.  provides  soil and  groundwater  remediation  and  hazardous
material  management  cleanup  for  industrial,   commercial,  and  governmental
clients. P.W. Stephens Services,  Inc., through its RSI Hydro Services division,
offers industrial  cleaning services primarily for industrial,  commercial,  and
governmental clients utilizing ultra-high pressure water technology. The work of
P.W. Stephens St. Louis is generally performed under cost-plus-fee  contracts or
fixed price contracts.  P.W. Stephens St. Louis provides services to its clients
through its office in St. Louis, Missouri.

JL MANTA

JL  Manta  provides  industrial   maintenance  services  to  Industrial  Process
Companies such as Oil Refineries,  Nuclear Power Plants,  Steel Mills, Paper and
Pulp Plants,  Utilities and Food Processing  Plants. The services Manta provides
include hydroblasting,  coatings/painting,  fireproofing,  sandblasting and lead
abatement primarily to customers in California,  Illinois, Indiana, Kentucky and
Florida.  Manta performs under cost-plus-fee  contracts or fixed price contracts
and time and material contracts.

ENVIRONMENTAL REMEDIATION SERVICES:

ASBESTOS ABATEMENT

From 1910 until 1978, asbestos was a common ingredient in building materials due
primarily  to its ability to retard  fire,  absorb heat from  friction,  provide
insulation from heat and cold,  resist corrosion and add tensile  strength.  The
Environmental  Protection Agency,  ("EPA"),  began to ban the use of asbestos in
construction  products in 1973,  in response to evidence  that  asbestos  causes
certain  forms of cancer  and poses  other  health  hazards.  The first  Federal
regulations  requiring  the removal of asbestos,  however,  did not appear until
1986 when Congress passed the Asbestos Hazard Emergency  Response Act ("AHERA").
This legislation  required all public schools to identify  materials  containing
asbestos and develop management  programs.  An increase in awareness of asbestos
hazards led to an increased demand for abatement. However, since 1990, there has
been a trend toward management in place rather than removal where possible.  The
EPA now  recommends  abatement  only when other  options,  such as management in
place,  will not work, or when  renovation will disturb the material and cause a
potential health risk to workers. Although there are currently no laws requiring
the removal of asbestos from buildings,  there are numerous  federal,  state and
local  regulations  which govern the removal or disturbance of asbestos  through
demolition, renovation, remodeling, or repairs.

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The  Company's   asbestos   abatement   services  include  complete  removal  of
asbestos-containing  materials  as  well as  encapsulation  and  enclosure.  The
Company's workers remove asbestos in accordance with the regulations promulgated
by the EPA,  the  Occupational  Safety and Health  Administration  ("OSHA")  and
various state and local agencies.

Before any removal can begin,  the work area must be sealed off from other parts
of the building as well as from the outdoor environment. Containment of the work
area  requires  the  construction  of barriers  on the walls and  floors.  These
barriers must be made of polyethylene  plastic  sheeting sealed at the seams or,
in some cases, more permanent  materials to provide a continuous  isolation that
will prevent fibers from escaping.  Once contained the work area can be accessed
only through one entrance  and an air  filtration  system is required to further
prevent  escape of any asbestos  fibers.  The Company  constructs a  three-stage
worker  decontamination  chamber  which is  generally  comprised of a clean room
where  workers  prepare  for the  work,  a shower  room and a dirty  room  where
contaminated  clothing is discarded.  Signs and barricades are posted around the
work area,  positioned so that an individual can take protective  steps to avoid
exposure.

The containment  areas are equipped with high efficiency  negative  pressure air
filtration machines. The negative air units, equipped with HEPA filters,  ensure
that  air  is  decontaminated  before  being  exhausted  outside  the  building.
Additional  pre-filters are used to trap large  particles  before they reach the
HEPA filter.  At certain  times during the  abatement  process,  air samples are
taken to indicate the level of airborne  fibers both inside and outside the work
area in order to protect the worker and building occupants.

Prior to removal,  workers wet the asbestos  containing material and then remove
it in small sections before it dries. Gross removal is considered  complete only
when no visible clumps of  asbestos-containing  materials remain on the surface.
All surfaces are then thoroughly scrubbed. After cleaning, the surface is coated
with a  penetrating  encapsulate  to seal  off  any  potential  residual  fibers
remaining.  Plastic  sheeting on walls and floors is also covered with a mist of
sealant.

Before the isolation  barrier is dismantled,  a final air sample is taken.  When
the  level  of  airborne  fibers  is equal to or below  0.01  fibers  per  cubic
centimeter  (f/cc),  the isolation barrier can be removed and disposed of in the
same  manner as  asbestos  waste.  After  removal,  the work area is  thoroughly
cleaned using high efficiency  particulate air filter  vacuuming and wet mopping
of all surfaces.  

Each  asbestos  field  worker  must  complete  training  and safety  programs as
required  by state and  federal  regulations.  Workers  are  required  to wear a
suitable  respirator,  a one-piece  disposable  suit that contains head and foot
covers,  and rubber  gloves at all times while  working in  contaminated  areas.
Suits  and  gloves  are  disposed  of and  replaced  after  each  exit  from the
containment work area.

The Company  believes that the asbestos  abatement market will continue to offer
business  opportunities,  driven  by  factors  such as the  existence  of strict
regulation,   building  renovation  and  demolition,   catastrophe  repairs  and
restoration,  public  awareness  and desire for an  asbestos  free  environment,
worker  demand for  protection,  and  liability  concerns  of  building  owners,
contractors, realtors, lending institutions and insurance companies.

LEAD ABATEMENT

Lead-based  paint is considered the most  prevalent  source of lead poisoning in
the United States,  and it poses a risk to occupants and  construction  workers.
Lead was added to paint  used on the  interior  and  exterior  of  buildings  to
shorten  drying time and  increase  the  durability  of paint.  The EPA began to
restrict  the use of  lead-based  paint  during the 1970s.  The largest  initial
market for lead-based  paint  abatement is public  housing.  Laws concerning the
disclosure,  identification  and abatement of lead-based  paint already exist in
some states. Federal regulations require the inspection of all Housing and Urban
Development  ("HUD")  housing  built prior to 1978 and abatement of any existing
hazards.

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The  Company  removes  lead  from  various  surfaces  using  various  techniques
including  wet  sanding,  stripping  or  component  replacement  and ultra  high
pressure  water   blasting (see  "Industrial   Cleaning").   The  Company  also
encapsulates  and  encloses  surfaces  of lead based  coated  products.  As with
asbestos removal, dust minimization and control of the environment are required.

Each lead field worker and supervisor must complete  training  programs required
by state  regulations.  The  training  course  provider  must be licensed by the
appropriate  state agencies and the course must meet EPA recommended  standards.
The Company believes that it is in compliance these training requirements.

SOIL AND GROUNDWATER REMEDIATION AND HAZARDOUS MATERIALS CLEANUP

The Company  performs soil and groundwater  remediation and hazardous  materials
services.  Soil  remediation is used to repair or contain  environmental  damage
caused when hazardous  materials  have been allowed to leak into the soil.  When
hazardous  materials are released into the environment,  site remediation may be
necessary to eliminate potential health risks and contamination of land, air and
water. Soil and groundwater  remediation services offered by the Company include
underground storage tank cleaning,  removal and installation;  soil sampling and
analysis;    excavation   and   disposal;   soil   stabilization;    bioventing;
bio-remediation; soil vapor extraction/air sparging, groundwater remediation and
soil recycling. The Company also offers system  installation/operation  and site
restoration.

Before a remediation  project  begins,  an  environmental  assessment is usually
conducted  to  identify  the type  and  extent  of  contamination.  The  Company
generally  performs this assessment  through a joint venture with an independent
environmental  engineering firm or it is conducted by the client's environmental
consultant.  Once the  assessment is completed,  the Company will then assist in
formulating a remediation solution which meets the client's individual needs.

UNDERGROUND STORAGE TANKS

Growing concern over  environmental  drainage and associated public health risks
has led to the development of regulations  governing  underground storage tanks.
The release of tank contents into the environment can contaminate  soil, air and
drinking water  supplies.  Depending upon the product's  chemical makeup and the
site  geology,  contaminants  can migrate  great  distances  both  laterally and
vertically  from a storage  tank.  In  connection  with its storage tank removal
services,  the  Company  offers a number of  services,  including  tank and line
removal;  tank  decontamination;  tank  disposal;  soil  sampling and  analysis;
bio-remediation;  soil excavation,  transportation,  disposal and recycling; new
tank installation; and storage tank closure/abandonment in place.

Tank removal is generally the most effective  method of dealing with the closure
of underground  storage tanks. The Company will generally isolate the work area,
remove and  decommission  the tanks,  treat the soil or excavate all  accessible
contamination and restore the area for reuse.  Special  precautions are taken to
minimize the release of any  contaminated  materials  into the  environment.  If
contaminated  materials  need to be hauled for  disposal,  these  materials  are
transported  to an EPA,  state,  or owner  approved  disposal  site.  In certain
circumstances,  alternative  methods  of soil  remediation  such  as soil  vapor
extraction and bio-remediation can achieve the required results at a lower cost.
The Company  assists in  determining  and executing  projects  which provide the
client with the various methods of resolving underground storage tank problems.

PCB CLEANUP

The Company also services  sites  contaminated  with PCB's and other  associated
substances.  The  Company is  capable  of  handling  the  various  phases of PCB
projects, including PCB oil removal, transformer removal, soil removal, concrete
cleaning and removal, facility decontamination,  contaminant  transportation and
disposal and site restoration.

The removal of PCB contaminated  soil from commercial and industrial  properties
may range from the removal of several  inches of top soil to gross  excavations.
In addition,  in many instances involving the uncontrolled release of PCB's from
transformers  or other oil cooled  electrical  equipment,  surrounding  concrete
surfaces are contaminated.  The Company addresses this contamination through the
use of special purpose  surfactants or, if necessary,  the selective  removal of
affected material.  These projects may require special  precautions to eliminate
the migration of contaminated  dust particles  depending on whether a dry or wet
method is used. In such case,  the Company will install  containment  systems to
prevent the migration of materials  ranging from the  construction of completely
encapsulated enclosures to the use of dust suppression agents.

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INDUSTRIAL CLEANING

The Company provides  industrial cleaning services primarily using hydroblasting
technology.  Hydroblasting  utilizes  high-water  pressure  ranging  from 20,000
pounds per square inch (psi) to 40,000  psi, at a very low flow rate,  to remove
protective  coatings and product buildup in industrial and commercial  settings.
Hydroblasting  can remove urethane  coatings,  fiberglass  coatings,  rubberized
coatings, and lead-base paint from steel and concrete substrates.  Hydroblasting
can also be used to cut steel and concrete through the use of entrained abrasive
without the risk of sparking. Industrial cleanings services are also utilized in
cleaning  barges,  railroad  cars and  conveyor  systems  in  manufacturing  and
distribution plants.

INSULATION

The Company also provides  industrial and commercial  insulation  services which
include the installation of high and low temperature insulation on pipes, ducts,
furnaces,   boilers,  and  various  other  types  of  industrial  equipment  for
industrial and  commercial  facilities as well as new  construction.  Insulation
services also provides  maintenance for both existing  facilities as well as new
construction.

RAW MATERIALS

The Company  obtains  its raw  materials,  supplies  and small tools used in its
operations from multiple  vendors.  Although  unforeseen  costs and delays could
occur  resulting  from  catastrophic  environmental  emergencies,   the  Company
believes that sufficient sources of raw materials exist to cover its operational
needs.

MARKETING

The  Company's  primary  target market is large  industrial  customers who use a
variety of contract services,  on a continuous and/or situational basis, as part
of their ongoing  facility  repair and maintenance  processes.  The Company also
markets its services to general and specialty contractors,  commercial and large
residential  property  owners and managers,  insurance  carriers,  environmental
consultants,  architects,  realtors,  mortgage lenders, federal, state and local
governments and agencies, schools, the military and homeowners.

The   strategies   for   generating   new  business  vary  among  the  Company's
subsidiaries.  Residential relies heavily on personal selling efforts, referrals
and yellow pages  advertising.  St.  Louis  utilizes a  combination  of personal
selling,   bid  solicitations  and  repeat  business  from  existing  and  prior
customers.  Manta markets its services in a manner similar to St. Louis but also
has developed and markets  "partnering"  arrangements  under which it works with
its  customers,  on a long term basis,  to increase  efficiency and reduce costs
incurred by those customers.

In general, the Company's  subsidiaries do not have personnel dedicated to sales
and marketing,  rather they rely on a combination of project mangers, estimators
and senior operating managers to execute its sales efforts.  Currently, there is
limited  cross-selling of services among  subsidiaries.  Management expects that
the  shift  in focus to  specialized  maintenance  services  will  provide  more
opportunities for cross-selling among subsidiaries. As a result, the Company has
begun coordinating its marketing efforts accordingly.

CUSTOMERS

The shift in  strategic  direction of the Company is resulting in changes in the
Company's  customer  list.  Management  expects  that  there  will be a  greater
percentage of major  industrial  customers with significant  repeat  specialized
maintenance  requirements and/or the need for remediation  services.  Management
also  expects  that  fifty  percent  (50%)  or more of  such  contracts  will be
performed  on  a  time  and  materials  basis.  These  customers  are  generally
credit worthy and the nature of the  contracts  minimizes  scope and  collection
disputes.

The  customer  base no  longer  includes  the large  real  estate  and  property
management  firms which  historically  were the source of a large portion of the
Company's  commercial  asbestos  abatement  business.  In addition,  the Company
expects  to  minimize  the  number  of large ,  competitively-bid,  fixed  price
contracts which were typically involved with these customers.

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Residential's  customer  base  continues to be made up primarily of  residential
property owners and managers.  Contracts are typically not large and the Company
has not traditionally encountered significant collection problems.

During the fiscal years ended  September  30, 1997 and 1996,  the Company had no
customers that accounted for more than ten percent (10%) of revenue.

COMPETITION

The  Company   provides   services   throughout  the  Western,   Midwestern  and
Southeastern  United  States,  primarily in the states of  California,  Florida,
Indiana,  Illinois,  Iowa,  Kentucky,  Nebraska and Ohio.  These markets are all
competitive  markets in which numerous other  companies  compete on the basis of
quality,  service and price.  Many of the  competitive  firms have  revenues and
capital  resources  exceeding  those of the Company.  The Company  believes that
competitive  pressures  will  continue  but that it will  continue  to receive a
reasonable  share  of the  contracts  awarded  based  on  its  ability  to  meet
competitive pricing levels and to provide high quality service to its customers.

INSURANCE

The Company has obtained primary auto liability,  commercial  general liability,
pollution  liability,  worker's  compensation  and employer's liability policies
with its insurance  carrier.  The coverage limit per occurance is $1,000,000 and
$5,000,000 in the aggregate for the commercial general liability,  the pollution
liability and the employer's  liabilities.  The coverage limit per occurence for
the auto liability and worker's  compensation is $5,000,000.  In addition to the
primary  insurance  policy limits,  the Company has obtained an  umbrella/excess
insurance per occurence in the amount of $4,000,000 for the  commercial  general
liability,  the pollution  liability and the  employer's  liabilities.  Included
under the Company's current insurance program are certain general risks inherent
in the industrial  service industry such as the liability from delays,  fires or
breaches in the enclosure or  "containment"  of a work area  resulting  from its
acts or the acts of subcontractors.

JL Manta  has  workers  compensation,  general  liability,  auto  and  equipment
insurance  coverages  through  a group  captive,  along  with  thirty  one other
companies,  with  United  Trades  Insurance  Company.  The  coverage  limit  per
occurance is $1,000,000 and  $2,000,000 in the aggregate for general  liability.
The  coverage  limit per  occurence  for the auto and  equipment  liability  and
worker's  compensation is $1,000,000.  Each member of the capitve is required to
supply letters of credit in certain amounts. Manta'a current letter of credit is
$1,200,000 and subject to a negotiated  increase.  Once approximately 28% of the
premiums are paid for fixed costs and taxes,  including excess loss reinsurance,
the  remainder  is  applied  to  insurance  claim  funds,   segregated  by  each
participant member of the group. These funds will pay claims up to $300,000. For
three years after policy expiration, claims are paid and losses reserved against
the claim  funds,  after  which  the  remaining  balances  are  refunded  to the
members's  equity and the deficit  member's letter of credit will be drawn upon.
Each policy year stands alone for claims and calculation of refunds.

BONDING

Commercial and industrial projects involving environmental cleanup or demolition
often require contractors to post both performance and payment bonds, or letters
of credit in lieu  thereof,  at the  execution  of a  contract.  These bonds are
required to protect the  interests of the general  public and private  owners in
order to guarantee  that the projects will be completed  and all  subcontractors
and vendors are paid. The Company is currently meeting its bonding needs through
its  relationships  with Reliance  Surety Company,  Allied Surety,  and American
International Group as projects require.

GOVERNMENT REGULATION

The  Company's  operations  are strictly  regulated by statutes and  regulations
administered by several  federal,  state and local agencies.  These statutes and
regulations cover all aspects of the environmental health and safety industry as
well as the  construction  industry in general.  The  Company's  operations  and
compliance with statutes and  regulations  are reviewed by various  governmental
agencies  and,  from  time  to  time,  these  agencies  may  make  requests  for
information or issue citations for noncompliance.

FEDERAL REGULATION

Asbestos abatement  operations are subject to regulation by federal,  state, and
local  governmental  authorities,  including  OSHA,  EPA and the  United  States
Department of  Transportation  ("DOT").  In general,  OSHA  regulations  set the

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maximum  asbestos  fiber  exposure  levels  applicable  to employees and the EPA
regulations provide asbestos fiber emission control standards.  The EPA requires
use  of  accredited  persons  for  both  inspection  and  abatement.   OSHA  has
promulgated  regulations  specifying  airborne asbestos fiber exposure standards
for workers,  engineering and administrative controls,  workplace practices, and
medical  surveillance and worker protection  requirements.  OSHA's  construction
standards require companies  removing asbestos fibers to conduct air monitoring,
to provide  decontamination units and to appropriately supervise the operations.
Transportation  and  disposal  activities  are  also  regulated.  The  DOT  sets
standards for management of the packaging and transportation of asbestos.

Lead hazard removal is currently regulated by OSHA and the EPA. In general, OSHA
regulations set the permissible lead exposure level for construction workers and
EPA  regulates  emission  of  lead  into  the  air and  soil.  Disposal  of lead
containing  material is regulated under the Resource  Conservation  Recovery Act
(RCRA).  The EPA has been  mandated by Title X (the  Residential  Housing Act of
1992) to have contractor training and certification requirements in place during
1994. These interim training guidelines were implemented on November 1, 1994.

STATE AND LOCAL REGULATIONS

The  Company  conducts  its  business  primarily  in the  states of  California,
Florida,  Indiana,  Illinois, Iowa, Kentucky,  Nebraska and Ohio. Each state has
its own local laws and  regulations  to supplement the federal laws. A number of
states  have  promulgated   regulations   setting  forth  such  requirements  as
registration or licensing of asbestos  abatement  contractors,  training courses
and  licensing  for  workers,  notification  of  intent to  undertake  abatement
projects and requires approvals from certain state agencies. Management believes
the Company  holds all necessary  licenses and permits  required by these states
for business operation.

Currently, some states where the Company conducts its business have enacted lead
related  regulations  applicable  to the  removal or  disturbance  of lead.  The
California  counties of San Francisco and Alameda have passed  lead-based  paint
ordinances  which  regulate  removal  practices.  States and other  counties are
expected to comply with EPA recommended training  requirements.  Management does
not  expect  such  regulations  to have a  significant  impact on the  Companies
operations or financial results.

SOIL AND GROUNDWATER REMEDIATION AND HAZARDOUS WASTE MANAGEMENT

The  Company  and  its   customers   are  subject  to  extensive   and  evolving
environmental  regulations  administered  by the  EPA,  OSHA and  various  other
federal,  state and local  environmental and safety and health agencies relating
to its soil and groundwater  remediation services as well as its hazardous waste
management services.  Although the Company's customers remain responsible by law
for their  environmental  problems,  the  Company  must  itself  comply with the
requirements  of those laws  applicable  to its  services.  Because the field of
environmental  protection is both  relatively  new and rapidly  developing,  the
Company  cannot  predict the extent to which its  operations  may be affected by
future  enforcement  policies as applied to existing laws or by the enactment of
new  environmental  laws and regulations.  Moreover,  any predictions  regarding
possible  liability  are  further  complicated  by the fact that  under  current
environmental laws the Company could be jointly and severally liable for certain
activities  of third  parties  over whom the  Company  has little or no control.
Although  management  believes  that the  Company is  currently  in  substantial
compliance  with all  applicable  laws and  regulations,  the  Company  could be
subject to fines, penalties or other liabilities or otherwise adversely affected
by  existing  or  subsequently  enacted  laws  or  regulations.   The  principal
environmental  laws  affecting  the Company and its customers in these areas are
briefly discussed below.

The Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), and the
regulations   promulgated  by  the  EPA   thereunder   establish  a  strict  and
comprehensive  regulatory  program  governing  the  handling  and  treatment  of
hazardous  waste.  The EPA has  promulgated  regulations  under RCRA for new and
existing  treatment,  storage and disposal  facilities  including  incinerators,
storage and treatments tanks, storage containers,  storage and treatment surface
impoundments, waste piles and landfills. RCRA defines solid and hazardous waste,
regulates the  preparation of wastes for shipment,  record keeping and reporting
requirements.  Specific approved disposal methods are also defined for different
waste streams.

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The Safe Drinking Water Act ("SDWA"), was established to protect groundwater and
drinking water sources.  Two types of drinking water standards were  established
to limit the amount of  contamination  that may be in  drinking  water:  primary
standards with a maximum  contaminant level (MCL) to protect human health,  and,
secondary  standards  that  involve the color,  taste,  smell or other  physical
characteristics of a drinking water source.

The Clean Water Act (CWA),  controls the discharge of toxic materials discharged
into  surface  streams  and  other  navigable  waters.  The EPA has  established
effluent standards covering 129 toxic pollutants.  Toxic and hazardous waste are
generated  primarily  from  industries  and  farmlands.  Industries  discharging
directly  into surface  streams and other  navigable  waters are  regulated by a
NPDES (National Pollutant Discharge Elimination System) permit.  Discharges into
municipal sewer plants are required to meet pretreatment requirements.

The Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA", also referred to as the "Superfund Act"). CERCLA governs the clean-up
of  sites  at which  hazardous  substances  are  located  or at which  hazardous
substances  have  been  released  or are  threatened  to be  released  into  the
environment. CERCLA authorizes the EPA to compel responsible parties to clean up
sites and provides for punitive damages for noncompliance.  CERCLA imposes joint
and  several  liability  for the  costs  of  clean-up  and  damages  to  natural
resources.

Health and Safety  Regulations.  The  operation of the  Company's  environmental
activities  are subject to the  requirements  of the OSHA and  comparable  state
laws.  Regulations  promulgated  under OSHA by the  Department  of Labor require
employers  of  persons  in  the  transportation  and  environmental  industries,
including  independent  contractors,  to implement hazard  communications,  work
practices and personnel  protection  programs in order to protect employees from
equipment safety hazards and exposure to hazardous chemicals.

OTHER LAWS

The Company's activities are subject to various federal environmental protection
and  similar  laws,  including,  without  limitation,  the  Clean  Air Act,  the
Hazardous  Materials  Transportation  Act and the Toxic Substances  Control Act.
Many states,  also have adopted laws for the protection of the environment which
may affect the Company,  including  laws  governing  the  generation,  handling,
transportation and disposition of hazardous substances as well as laws governing
the investigation and clean-up of, and liability for,  contaminated  sites. Some
of these state  provisions are broader and more stringent than existing  federal
laws and  regulations.  The  failure of the  Company to comply and  conform  its
operations  to the  requirements  of any of these  federal  or state  laws could
subject  the  Company to  substantial  liabilities  which  could have a material
adverse  affect on the Company,  its  operations  and financial  condition.  The
Company cannot predict the extent to which it may be affected by any law or rule
that  may be  enacted  or  enforced  in the  future,  or  any  new or  different
interpretations of existing laws or rules.

COMPLIANCE

The Company believes that it is in substantial  compliance with all local, state
and federal  regulations  relating to its operations.  To insure such compliance
the Company has developed and maintains its own quality control program.  As one
aspect of this program,  the Company's  quality control  officers perform random
inspections  before,  during,  and  after  project  operations.   Categories  of
inspection  include  isolation  barriers,   decontamination  units,   protective
equipment,   negative  pressure,  work  practices,  general  housekeeping,   air
monitoring, disposal, detail and final clean-up,  demobilization and enforcement
of state regulations.

RESEARCH AND DEVELOPMENT

Research and  development  activities  for the fiscal years ended  September 30,
1997  and 1996  have  not been  material  and the  Company  has had no  customer
sponsored research activities during each of these periods.

EMPLOYEES

As of December 20, 1997, the Company had  approximately  61 full-time  personnel
employed as executives,  managers, project managers, safety directors, sales and
estimators,  as well as administrative and clerical  support.  In addition,  the
Company also employs an hourly  direct labor force which  totaled  approximately
130  employees  as of December 20,  1997.  The number of direct labor  personnel

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employed by the Company  varies  throughout  the year and ranged between 110 and
400 for fiscal  year 1997.  As of December  20,  1997,  approximately  40 of the
Company's  employees  were  represented by  unions under  collective  bargaining
agreements.  Such  bargaining  agreements  between  the  Company  and the unions
represent  employees based upon  geographic  region and expire at various times.
All of the  employees  represented  by such  agreements  are employed in the St.
Louis operations. 

In addition to the Company's existing  employees,  as of December 20, 1997 Manta
had  approximately  47 full-time  personnel  employed as  executives,  managers,
project  managers,   safety  directors,   sales  and  estimators,   as  well  as
administrative and clerical support.  In addition,  Manta also employs an hourly
direct labor force which  totaled  approximately  428  employees.  The number of
direct labor personnel  employed by Manta varies  throughout the year and ranged
between  200  and  700  for  fiscal  year  1997.   As  of  September  29,  1997,
approximately  40  of  Manta's   employees  were  represented  by  unions  under
collective bargaining agreements. Such bargaining agreements between the Company
and the unions  represent  employees based upon geographic  region and expire at
various times.

The Company  believes that its relations with its employees are satisfactory and
has not experienced any work stoppages or slowdowns.

SEASONALITY

The  Company's  business is subject to  variations  in  revenues  and results of
operations for interim periods and from year to year. Increased revenues may not
always  result in a  corresponding  increase  in  results of  operations.  These
conditions  are due to a number  of  characteristics  shared by the  Company  to
varying  degrees  with  most  other  members  of  the  industry,  including  the
following:  (1) its business is seasonal ( typically less activity in the winter
months) and is affected by the  scheduling of work at commercial  properties and
outages at utilities and other industrial facilities;  (2) its business is labor
intensive;  (3) its  performance  on a given  project is often  dependent on the
performance  of other  contractors,  who are working on the same job, over which
the Company has no control;  and (4) costs ultimately incurred by the Company on
a job may be  materially  affected by such risks as  technical  problems,  labor
shortages  and disputes,  time  extensions,  weather,  delays caused by external
timing  of  large  contracts,  especially  if all or a  substantial  part of the
performance  of such contracts  occurs within one or two quarters.  Accordingly,
quarterly  results or other interim results should not be considered  indicative
of results to be expected for any other quarter or for the full fiscal year.

ROYALTIES, PATENTS AND TRADEMARKS

The Company does not currently own any patents, royalties, trademarks, licenses,
franchises or concessions which are material to its business.

GLOSSARY
Amended water: Water which has had a detergent compound added for the purpose of
lowering  surface  tension  to allow  more  liquid to come in  contact  with the
surface.

Air sparging:  Forcing air through  groundwater  to  essentially  strip volatile
hydrocarbons from liquid phase to gaseous phase.

Bio-remediation:  Utilizing aerobic and facultative  metabolic pathways that are
available through a microbial  consortium.  Capable of biologically  degrading a
myriad of organic compounds. (Example - Petroleum)

Bioventing:  Using a vacuum  system  to  ventilate  soils  in  order to  augment
biodegration of petroleum contaminant in soil.

Contaminate  plume: The zone of contamination as it migrates through soil and/or
groundwater.

DOT: Refers to the Department of Transportation.

EPA: Refers to the Environmental Protection Agency.

Groundwater  remediation:  Refers to numerous technologies used to decontaminate
groundwater.

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HEPA Filter: High Efficient Particulate Air filter.

Manifesting: The act of documenting pathways of waste transportation.

OSHA: Refers to the Occupational Safety and Health Administration.

PCB: Polychloronated biphenyls.

RCRA: Refers to the Resource Conservation and Recovery Act of 1976, as amended.

Soil excavation: Removing soil with heavy equipment.

Soil  stabilization:  Amending  soil with a fixative  that  binds a  contaminant
minimizing the leachability of a constituent.

Soil vapor  extraction:  Removing  volatile  organic  constituents  from soil by
vacuum and vertical or horizontal well systems.

Substrates:  A general term denoting what a chemical,  i.e. asbestos,  coal tar,
etc., is attached to.

Surfactants:  Chemicals which reduce the surface tension of water enabling it to
saturate materials more easily.

Tank  decontamination:   Removing  residual  tank  contents  through  mechanical
chemical or hydro-mechanical methods.

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ITEM 2. DESCRIPTION OF PROPERTY

The  Company  currently  leases 7  properties  in four  states  to  support  its
operations.  One of the leased  facilities  located in  California  is not being
utilized but has been sublet  effective  January 1, 1998.  The Company  believes
that the remaining  facilities  are  sufficient to meet the needs of its current
operations  and that  substitute  and or  additional  space will be available as
needed to accomodate  expansion of operations and growth  through  acquisitions.
The following discussion summarizes the Company's leased properties.

EIF Holdings, Inc. (EIFH)

EIFH currently leases property in two states to support its corporate functions.
The Company's  principal  office is located at 53 Stiles Road, Suite 101, Salem,
NH which  consists of  approximately  1,100  square feet with a monthly  rent of
$1,200 expiring in September 1998. EIFH also leases 1,000 square feet located at
616FM 1960 West, Suite 630,  Houston,  TX with a monthly rent of $1,200 expiring
in April 1998.

P.W. Stephens Residential, Inc. (Residential)

Residential  currently  leases three  facilities  in  California  to support its
operations.  All facilities  include office and warehouse  space.  Residential's
principal location is located at 15210 Pipeline Lane, Unit B, Huntington  Beach,
CA which  consists of  approximately  5,100  square feet with a monthly  rent of
$2,800  expiring in November  1999.  The other two  Residential  properties  are
located at 3475  Investment  Blvd.,#1,  Hayward,CA  and 7955  Silverton St., San
Diego, CA which consist  respectively of 700 and 550 square feet, a monthly rent
of $1,000 and $800 and expire in January 2000 and June 2000.

In June 1997, Residential vacated its Carmichael,  CA facility,  under a tenancy
at will agreement, and supported those ongoing operations out of the Hayward, CA
facility. 

P.W. Stephens St. Louis (St. Louis)

St. Louis leases one principal facilty located at 1525 S. 8th Street, St. Louis,
Missouri which has both office and warehouse space in support of its operations.
The leased  property  consists  of  approximately  7,000  square  feet and has a
monthly rent of $2,950 and expires in April 1999.

Discontinued Operations

In the third quarter of 1997, the Company  discontinued its commercial  asbestos
operations. As a result of the discontinued operations the Company closed all of
its  associated  facilities.  The  following is a list of  facilities  that were
vacated under tenancy at will agreements:

          SAN FRANCISCO/                    SAN DIEGO:
          Oakland Bay Area:                 8130 Commercial St.
          14676 Doolittle Drive             La Mesa, CA
          San Leandro, CA

          LAS VEGAS:                        HONOLULU, HAWAII:
          4215 Bertos                       2959 Koapaka Street
          Las Vegas, NV                     Honolulu, Hawaii


The Company also closed the facility  located at 475 N. Muller Street,  Anaheim,
CA. The Anaheim  facility  carries a monthly lease payment of $8,500 and expires
in July 2002. The Company has sublet the Anaheim location effective January 1998
for a monthly payment of $7,400 with the same term as the existing lease.

On June 30, 1997 the Company divested its interest in Kelar Controls,  Inc. As a
result,  the  Company  has sold and  assigned  the lease  obligation  of Kelar's
facility in San Jose, CA.

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ITEM 3.  LEGAL PROCEEDINGS

On October 31,  1996,  a supplier of the Company  filed a lawsuit in Los Angeles
County  Superior Court naming both the Company and P.W.  Stephens as defendants.
The complaint seeks damages for unpaid invoices in the amount of $706,000,  plus
interest  charges and legal costs.  The Company has responded to the lawsuit and
on June 12,  1997  reached  a  settlement  with the  supplier  in the  amount of
$590,000.  The terms of the settlement  called for a payment a $150,000 due upon
the execution of the  settlement  and the balance to be distributed in ten equal
monthly  installments  of $44,000  commencing  July 15, 1997.  The Company is in
compliance with the terms of the settlement.

The nature and scope of the Company's business  operations bring it into regular
contact  with the  general  public,  a  variety  of  businesses  and  government
agencies.  These  activities  inherently  subject  the Company to the hazards of
litigation,  which are defended in the normal course of business. The Company is
currently  involved  in  several   litigations  and   investigations   including
regulatory  compliance.  Although  the  outcome of these  claims is not  clearly
determinable at the present time,  Management believes that such proceedings are
either adequately covered by insurance, or if uninsured, by the estimated losses
it has recorded to date.  The resolution of such claims,  however,  could have a
material  effect on the  Company's  results of  operations  or cash  flows.  The
reserves  for  litigation  and  contingencies  recorded  by  the  Company  as of
September 30, 1997 amounted to $1,349,000.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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<PAGE>
                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The  Common  Stock of the  Company  is  traded in the  over-the-counter  market.
Quotations are published in the National  Quotation Bureau "Pink Sheets" and the
NASDAQ  OTC  Bulletin  Board.  The  following  table sets  forth, for the fiscal
quarters  indicated,  the range of high and low bid quotations for the Company's
Common  Stock  as  reported  by the  National  Quotation  Bureau,  Inc.  The bid
quotations  presented  are between  broker-dealers  and do not retail  mark-ups,
mark-downs or other fees and commissions.  As a result, the following quotations
may not reflect actual transactions.


          Fiscal Year ended September 30, 1997:   High/Ask    Low/Bid
                                                 ---------   ---------
               Quarter ended September 30, 1997    23/32       11/32
               Quarter ended June 30, 1997         13/16        5/16
               Quarter ended March 31, 1997        31/32        9/32
               Quarter ended December 31, 1996      5/8         9/32

          Fiscal Year ended September 30, 1996:   High/Ask    Low/Bid
                                                 ---------   ---------
               Quarter ended September 30, 1996     1/2         1/2
               Quarter ended June 30, 1996          5/8         1/2
               Quarter ended March 31, 1996        15/16       11/16
               Quarter ended December 31, 1995      5/32        1/32


Stockholders

As of December 31, 1998, the Company had approximately 197 record holders of its
Common  Stock,  as  reflected  on the  books of the  Company's  transfer  agent.
Significant  number of shares  are held in street  name and as such the  Company
believes the actual number of beneficial owners is higher.

Dividends

The Company has not established a policy concerning payment of regular dividends
nor has it paid any  dividends  on its  Common  Stock to date.  Any  payment  of
dividends in the future will be determined by the Board of Directors in light of
conditions then existing, including the Company's earnings, financial condition,
capital requirements and debt covenants.

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ITEM 6. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

The Company has included on this Form 10-KSB certain forward-looking statements.
Forward-looking  statements  are  statements  relating to the  Company's  plans,
goals,  objectives,  strategies,  future  performance  and events as well as any
other  statements  or  representations  other than those  relating to historical
data. Forward-looking statements inherently possess risks and uncertainties.  As
a result,  although the Company's  forward-looking  statements  are expressed in
good faith, the Company's actual results could differ materially.

General

The  Company  has been  engaged in the  business  of  asbestos  abatement,  lead
abatement,  soil and hazardous waste  remediation and industrial  cleaning.  The
Company  services  commercial,  industrial and residential  customers  primarily
located in the western,  midwestern and southeastern areas of the United States.
The Company's  objective is to become a full service industrial  maintenance and
remediation  provider to customers  throughout  the United  States.  The Company
expects to achieve its  objective by expanding  the service  territories  of its
existing  operations  and  to  obtain  additional  geographic  presence  through
acquisitions.

Shortly after the May 1997  appointment  of Frank  Fradella as the President and
CEO of the  Company,  Mr.  Fradella and  American  Eco  Corporation  (AEC) began
implementing a plan to stablize the Company's  operations and financial position
and to provide it with the resources necessary to allow management to pursue its
new strategic  direction.  Several steps of the plan were  completed  during the
third and fourth  quarters of 1997. The first step taken was to discontinue  the
Company's  commercial asbestos operations (P.W. Stephens  Contractors,  Inc. and
QHI Stephens,  Inc.) which consistently generated losses and had been a drain on
capital  resources.  Administrative  staffing  levels and overhead  costs of the
remaining  operations were then reduced  approximately  35% in order to position
those  operations to generate  positive cash flows.  AEC increased the Company's
Line of Credit by  $14,750,000  to  $20,000,000 in order to allow the Company to
meet certain of its existing obligations. As part of the increase in the Line of
Credit,  an  agreement  was made  between  AEC and the Company  allowing  AEC to
convert its obligation from the Company into common stock subject to shareholder
approval of an increase in authorized  shares of the Company's  common stock. No
assurance can be made that the  shareholders  will approve such an increase.  In
line  with  the  Company's  strategy  to focus  in the  specialized  maintenance
services industry, the Company acquired all of the issued and outstanding shares
of JL Manta,  Inc. on November  19, 1997.  In addition the Company  divested its
interest in Kelar Controls which did not fit the Company's strategic  direction.
Pursuant to the Aquisition Agreement dated June 30, 1997, the Company sold Kelar
to Regal Oak Properties, Inc.

Page 17
<PAGE>
                             Results of Operations
                                  1997 vs 1996
                             Continuing Operations
Revenue:

Revenue for the year ended September 30, 1997 increased 3.3% to $13,434,000 from
$13,001,000  for the same  period  in 1996.  The  increase  in  revenue  was the
combined  result of an increase in revenue of 14.8% from  St.Louis to $7,293,000
offset by a decrease in revenue of (7.1%) to $6,141,000 from Residential. 

The  increase in revenue  from St.  Louis in the current  year was the result of
factors which occurred in fiscal 1996. In June 1996,  VonGuard and  Enstar-North
American,  Inc. were merged into FCA and the named was changed to P.W.  Stephens
Services, Inc. Select Abatement, Inc., a subsidiary of VonGuard, was merged into
RSI and the name was changed to P.W.  Stephens  Contractors,  Inc. P.W. Stephens
Services, Inc. and P.W. Stephens Contractors,  Inc. are collectively referred to
as P.W. Stephens St. Louis ("St. Louis"). The reorganization of these companies,
as well as the name changes, impacted the marketing efforts of the Company. Time
and resources  traditionally dedicated to marketing were required to assist with
the  organizational  changes of the Companies  for a certain  period of time. In
addition,  the change in name to P.W.  Stephens,  which  provided  a  consistent
identity among the Company's operating entities, had a short-term negative brand
recognition  impact for St.  Louis in its  existing  markets.  To  overcome  the
short-term  decline in revenue  experienced in fiscal 1996, St. Louis  allocated
additional  resources  in order to increase its sales  efforts.  The benefits of
these  additional  marketing  efforts  resulted in the current year  increase in
revenue.
  
The decrease in Residential's  revenue for the year ended September 30, 1997 was
also the result of a reorganzation of its operations that occurred over the past
fifteen  months.   In  the  quarter  ended   September  30,  1996,   Residential
consolidated  three of its branch  offices  into one.  The office  consolidation
occurred to recognize long-term  operational  efficiencies by servicing the same
geographic  region from one office.  This  office  consolidation  had a negative
impact on  residential's  revenue  in the first six  months of fiscal  1997.  In
addition,  in July of 1997,  Residential closed one of its operating  facilities
due  to  inconsistent financial  performance. 

Gross Profit:

Gross Profit as a percentage  of revenue for the year ended  September  30, 1997
was 36.7%  compared to 37.2% for the same  period in 1996.  The  decrease in the
gross profit  margin was the combined  result of a 2.1%  decrease in St.  Louis'
gross profit  margin to 21.5% offset by a 4.6% increase in  Residential's  gross
profit  margin to 54.8%.  The decrease in St.  Louis'  gross  profit  margin was
primarily due to variations in the  profitabiltiy  from its Department of Energy
contracts  and  increased  competitiveness  which  was  partially  offset by the
recognition of efficiencies  resulting from its operational  restructuring.  The
increase  in   Residential's   gross  profit  margin  was  the  result  of  cost
efficiencies  realized  from the  closing of one of its  branch  offices in July
1997.

Selling, general and administrative expenses:

Selling, general and administrative expenses (SG&A) for the year ended September
30, 1997 were $6,739,000 compared to $6,099,000 for the same period in 1996. The
increase  in SG&A  expenses  is due to several  factors.  The  Company  incurred
$2,300,000  of  management  fees in the current  year  pursuant to a  management
agreement with American Eco Corporation  ("AEC")  effective October 1, 1996. AEC
agreed to suppply the Company with management guidance and guaranteed certain of
the Company's  obligations in return for a quarterly management fee. See NOTE 15
-  RELATED  PARTY  TRANSACTIONS  of  the  financial  statements  for  additional
disclosure.  The Company  increased its litigation and  contingency  reserves by
$600,000 based on management's assessment of existing contingencies. The Company
also  increased  its reserve for trade  receivables  in the amount of  $220,000.
Without the impact of these items,  the Company's SG&A  decreased  approximately
42% from fiscal 1996.  The following  reflects  SG&A net of the special  charges
noted above.

The Company's corporate administrative expenses for the year ended September 30,
1997  were  $1,017,000  compared  to  $1,260,000  for the same  period  in 1996.
Corporate's  sg&a expenses in the current year are  consistent  with  historical
levels. In 1996, the Company's corporate SG&A included approximately $200,000 of
legal expenses  relating to a dispute and  litigation  with a former officer and
director.

Page 18
<PAGE>
Residential's SG&A as a percent of revenue for the year ended September 30, 1997
was 29%  compared  to 36% for the same  period  in 1996.  St.  Louis'  SG&A as a
percentage  of revenue  for the current  year was 22%  compared to 32% in fiscal
1996.  The decrease in both  Residential  and St.  Louis' sg&a was the result of
efficiencies recognized from their respective operational restructurings.

Other Expenses:

Interest expense for the years ended September 30, 1997 and 1996 were $1,435,000
and  $256,000  respectively.   The  increase  was  primarily  due  to  increased
outstanding  borrowings under the line of credit from its  shareholder,  AEC and
the utilization of certain factoring  arrangements.  Additional interest expense
was  recognized  in the current  year under  promissory  notes from two investor
groups.

Loss from Continuing Operations

The loss from  continuing  operations  for the year  ended  September  30,  1997
increased to  $3,129,000  compared to a net loss of  $1,434,000  during the same
period in 1996.  Losses during the current period reflect the combined result of
an increase in interest  expense,  the management fees incurred and the increase
in contingency and receivable reserves recognized in the current year.

Discontinued Operations

Revenue from the discontinued  commercial  asbestos operations of P. W. Stephens
Contractors,   Inc.  and  QHI  Stephens,   Inc.  (collectively  referred  to  as
"Commercial")  for the year ended September 30, 1997 was $7,060,000  compared to
$13,877,000  in the prior  year.  The  decline in revenue  was the result of the
Company's  decision  not to  accept  new  jobs  for  several  months  while  the
commercial asbestos operations were evaluated. As a result, current year revenue
represents approximately seven months of activity. The total net loss, including
loss on disposal of assets,  for the discontinued  operations for the year ended
September  30, 1997 was  $5,923,000  $0.24 per share  compared to  $3,312,000 or
$0.16 for the same period in 1996. The increased loss was the combined result of
ongoing  losses on several  large jobs,  an increase  in reserves  for  accounts
receivable,  recording of certain contingencies  associated with the disposition
and a provision of $300,000 for operating  losses expected through the phase out
period.

Revenue  from  Kelar's  operations  for the year ended  September  30,  1997 was
$1,089,000,  which represents nine months of activity,  compared to $661,000 for
the same period in 1996.  The  increase in Kelar's  revenue  was  primarily  the
result of an increase in the current year from a large  ongoing  energy  savings
contract compared to the same period in 1996. Kelar recognized a loss of $87,000
for the current year compared to a loss of $469,000 for fiscal 1996.

LIQUIDITY AND CAPITAL RESOURCES

Borrowings from American Eco Corporation (AEC) were the Company's primary source
of funding for fiscal 1997.  The balance due to AEC as of September 30, 1997 was
$17,609,424  compared  to  $4,908,000  for the same period in fiscal  1996.  The
original  terms of the AEC  facility  carried  a  maximum  borrowing  amount  of
$5,250,000,  interest  at the prime rate plus 2% per annum,  was  unsecured  and
matured on July 31, 1997.  Effective  July 31, 1997 the line of credit  facility
with AEC was renewed,  extended  and modified to increase the maximum  borrowing
amount to $15,000,000 and extend the maturity to February 18, 1998. On September
30, 1997 the borrowing  amount was increased  further to $20,000,000.  All other
terms  under the  original  line of credit  agreement  remained  unchanged.  The
renewal of the line of credit also  provides AEC an option to convert the entire
outstanding  principal  amount of the line of credit plus any accrued and unpaid
interest  outstanding  at the time of  conversion,  into  common  shares  of the
Company,  subject to  shareholder  approval to increase the number of authorized
shares.  The conversion  price for each common share is equal to 85% of the five
day  weighted  average  closing  price of the  common  shares  as  quoted in the
over-the-counter "pink sheets" immediately prior to the conversion date.

The Company utilized  factoring  arrangements as another  significant  source of
funds during the 1997 fiscal year. The Company  factored in excess of $4,800,000
of accounts  receivable  during the current year  compared to $200,000 in fiscal
1996. Under the terms of the factoring arrangement,  the Company received 65% of
the factored  receivables at an annual effective  interest rate of approximately


Page 19
<PAGE>
28% and was required to repurchase the  receivables if collection does not occur
within 90 days of the invoice  date.  On  September 3, 1997 the Company paid the
factor $1,580,000 which represented the total outstanding  obligations under the
existing   arrangements.   Management  does  not  intend  to  utilize  factoring
arrangements as a significant source of funds on an ongoing basis.

The Company  received  additional funds during the year ended September 30, 1997
under an  existing  line of  credit  with an  investor  group in the  amount  of
$805,000.  On September 30, 1996 the Company  obtained a line of credit facility
with a maximum  borrowing amount of $1,300,000,  bears interest of 10% per annum
and matures on March 1, 1998. The  outstanding  balance under the facility as of
September  30, 1997 was  $1,030,000  compared to $225,000 for the same period in
1996.

The  Company  also  received  funds  under a  promissory  note from a  different
investor  group.  The face  value of the  original  note  was  $300,000  with an
interest  rate of 12% and a maturity  date of March 13, 1997. On April 17, 1997,
the note was  extended  to July 31,  1997 and  amended  to allow the  Company to
borrow an  additional  $100,000.  As part of the  original  note and  subsequent
amendments and extensions,  the Company  committed to issue 480,000  warrants to
purchase the Company's  common stock.  These warrants are subject to shareholder
approval of an increase in the  authorized  number of  outstanding  shares.  The
conversion  price of the warrants  will equal to the market value on the date of
issue.  On  September 19, 1997, the Company  paid the  investor  group the total
amount  outstanding  under the note including  accrued interest in the amount of
$410,800.

On June 30, 1997, the Company sold its interest in Kelar Controls for $2,500,000
to Regal Oak Properties  Inc. Regal Oak financed the  transaction by issuing the
Company a Promissory  Note with an interest  rate of 10%, due and payable in one
(1) installment on June 30, 1998 and is secured by performance bonds.

In November 1997, EIF completed the acquisition of J.L. Manta,  Inc.  ("Manta"),
an Illinois  corporation,  which  provides  specialty  coatings  and  industrial
maintenance services.  (See FORM 8K dated November 29, 1997.) Consideration paid
by the EIF included $4,725,321 of cash and $2,235,312 of convertible  promissory
notes, payable in installments, with the final payment due on November 18, 2000.
The Company also entered into Retention Bonus Agreements with key Manta managers
providing for bonus payments  aggregating  $900,000 over a three-year period and
committed to provide 500,000  options to purchase EIF stock to Manta  employees.
The  cash  portion  of  the  acquisition  was  funded  through  a  $6.5  million
convertible  note payable to Deere Park Capital.  The Deere Park Capital note is
convertible, first to preferred stock at a price of $1.00 per share, and then to
common stock on a share for share basis. In order for the  conversion(s) to take
place, the Company must receive  shareholder  approval to increase the number of
authorized outstanding shares and complete certain filing requirements. While no
assure can be made that the note will be converted, the Company expects that the
note will be  converted  to equity.  Deere Park also issued Manta a $2.5 million
revolving  note in order to allow Manta to pay off the long-term  portion of its
existing credit facility with Harris Bank.

Manta  currently  has a  revolving  line of credit  facility  with  Harris  Bank
("Harris") and has financed certain equipment through Mercantile Bank of Indiana
("Mercantile").  The Company and Manta are in the process of completing a Credit
Agreement  with  LaSalle  National  Bank  ("LaSalle")  which  would  replace the
existing  Harris and  Mercantile facilities as well as the Deere Park  Revolving
Note. Although the LaSalle facility can not be guaranteed,  it is expected to be
a one year renewable  facility which will include a term loan,  revolving  loans
and letters of credit and the total to be in excess of $10 million. The facility
will be secured  by the assets of Manta and  guaranteed  by the  Company.  It is
anticipated that the facility will include typical financial  covenants and will
allow,  with certain  restrictions,  distributions  of excess cash  generated by
Manta to the Company.  The Company  believes that the cash  generated by Manta's
operations will be sufficient to meet Manta ongoing operational needs as well as
meet the debt service  obligations under the LaSalle credit facility,  the Deere
Park Note and the Seller's Notes.

The Company believes,  that the additional funds available under the AEC line of
credit,  the proceeds from the sale of Kelar,  the cash flows resulting from the
ongoing operations  coupled with the financing  arrangements the Company expects
to finalize will be sufficient  throughout the next twelve months to finance its
working  capital  needs,  planned  capital  expenditures,  debt  service and the
outstanding obligations from the discontinued operations.

Page 20
<PAGE>
ITEM 7. FINANCIAL STATEMENTS


                               EIF HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS


                                                           September 30,
                                                   ----------------------------
                                                       1997            1996
                                                   ------------    ------------
          ASSETS
Current assets:
   Cash........................................... $    304,678    $    178,231
   Accounts receivable, net.......................    3,807,367       7,299,059
   Securities available for sale..................    5,562,697            --
   Note Receivable................................    2,562,500            --
   Receivable, Officer............................       70,000            --
   Costs and estimated earnings on contracts
    in progress in excess of billings.............       52,003         326,343
   Supplies inventory.............................      165,079         478,370
   Prepaid and other current assets...............      561,605          85,816
                                                   ------------    ------------
        Total current assets......................   13,085,929       8,367,819

Machinery and equipment, net......................      603,940       1,275,087

Other noncurrent assets:
   Goodwill, net of accumulated amortization
    of $455,164 and $413,921 respectively.........      755,597         881,680
   Receivable, officer............................      210,000            --
   Other assets...................................       20,520          50,917
                                                   ------------    ------------
                                                        986,117         932,597
                                                   ------------    ------------
   Total assets................................... $ 14,675,986    $ 10,575,503
                                                   ============    ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
  Accounts payable and accrued liabilities........ $  2,408,077    $  6,428,112
  Notes payable...................................    1,695,120       1,825,538
  Billings in excess of costs and estimated
   earnings on contracts in progress..............      178,921         737,476
  Note payable due to shareholder.................   17,609,424       4,908,317
  Reserve for contingencies.......................    1,349,000            --
  Net liabilities of discontinued operations......    1,776,041            --
  Current maturities of long-term debt............         --           175,524
                                                   ------------    ------------
        Total current liabilities.................   25,016,583      14,074,967

Long term debt...................................          --            73,882
                                                   ------------    ------------
   Total liabilities..............................   25,016,583      14,148,849
                                                   ------------    ------------

Stockholders' deficit
  Common stock, no par value,  25,000,000 
   shares authorized, 24,618,201 issued and 
   outstanding at September 30, 1997 and 
   1996, respectively............................     3,019,246       3,019,246
  Additional paid-in capital.....................       804,696         804,696
  Accumulated deficit............................   (14,164,539)     (7,397,288)
                                                   ------------    ------------
        Total stockholders' deficit..............   (10,340,597)     (3,573,346)
                                                   ------------    ------------
   Total liabilities and stockholders'
     equity (deficit)............................  $ 14,675,986    $ 10,575,503
                                                   ============    ============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

Page 21
<PAGE>
                               EIF HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                      Years Ended September 30,
                                                   ----------------------------
                                                       1997             1996
                                                   ------------    ------------

Revenue........................................... $ 13,434,423    $ 13,001,341

Cost of revenue...................................    8,399,561       8,140,622
                                                   ------------    ------------
 Gross profit.....................................    5,034,862       4,860,719

Selling, general and administrative expenses......    6,738,610       6,098,897
                                                   ------------    ------------
                                                     (1,703,748)     (1,238,178)
Other:
 Other (income)expense............................      (10,189)        (59,413)
 Interest Expense.................................    1,434,992         256,445
                                                   ------------    ------------
Loss before provision for income taxes............   (3,128,551)     (1,435,210)

Provision for income taxes........................         --              --
                                                   ------------    ------------
 Loss from continuing operations..................   (3,128,551)     (1,435,210)

Discontinued operations, net of income taxes:
 Loss from operations on discontinued commercial
     asbestos operations including provision of 
     $300,000, for operating loss during phase
     out..........................................   (5,765,745)     (3,305,164)
 Loss on disposal of assets from
     discontinued commercial asbestos operations..     (156,863)           --
 Loss from operations on discontinued operations
     of Kelar Controls, Inc.......................      (86,672)       (469,346)
 Gain on sale of Kelar Controls, Inc..............    2,370,580            --
                                                   ------------    ------------
                                                     (3,638,700)     (3,774,510)
                                                   ------------    ------------
Net loss.......................................... $ (6,767,251)   $ (5,209,720)
                                                   ============    ============

Net loss per share:
 Continuing operations............................ $      (0.13)   $      (0.07)
 Discontinued operations..........................        (0.14)          (0.18)
                                                   ------------    ------------
Net loss per share................................ $      (0.27)   $      (0.25)
                                                   ============    ============

Weighted average number of common
  shares outstanding..............................   24,618,201      20,692,130
                                                   ============    ============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

Page 22
<PAGE>
<TABLE>
<CAPTION>
                                            EIF HOLDINGS, INC.
                              CONSOLIDATED STATEMENT OF  STOCKHOLDERS' EQUITY


                                           Common Stock
                                    ----------------------------                         Retained          
                                        Shares         Dollar         Additional         Earnings        
                                     outstanding       amount       paid-in capital      (Deficit)           Total     
                                    ------------    ------------    ---------------    ------------    ----------------
<S>                                 <C>             <C>                <C>             <C>                 <C>
Balance September 30, 1995.........   14,618,201    $  2,019,246       $    804,696    $ (2,187,568)       $    636,374


Issuance of common stock...........   10,000,000       1,000,000                -               -             1,000,000

Net loss...........................                           -                 -        (5,209,720)         (5,209,720)
                                    ------------    ------------    ---------------    ------------    ----------------

Balance September 30, 1996.........   24,618,201       3,019,246            804,696      (7,397,288)         (3,573,346)

Net Loss...........................                           -                 -        (6,767,251)         (6,767,251)
                                    ------------    ------------    ---------------    ------------    ----------------

Balance September 30, 1997.........   24,618,201    $  3,019,246       $    804,696    $(14,164,539)       $(10,340,597)
                                    ============    ============    ===============    ============    ================

</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements

Page 23
<PAGE>
                                  EIF HOLDINGS, INC.
                         CONSOLIDATED STATEMENT OF CASH FLOWS


                                                     Years Ended September 30,
                                                   -----------------------------
                                                       1997            1996
                                                   ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss......................................... $ (6,767,251)   $ (5,209,720)
 Adjustments  to reconcile  net loss to net cash
  used in operating activities:
   Gain on sale of Kelar Controls, Inc............   (2,370,580)           --
   Depreciation and amortization..................      472,058         584,016
   Loss on disposal of machinery and equipment....      156,863          46,332
 Changes in assets and liabilities:  
 Accounts receivable..............................    2,413,415      (1,719,552)
 Costs and estimated earnings in excess
   of billings on jobs in progress................      274,340          23,169
 Inventory........................................      152,305          51,584
 Refundable income taxes..........................         --           265,916
 Prepaid expenses and other current assets........      122,574         615,669
 Other assets.....................................       26,098         (16,225)
 Accounts payable and accrued liabilities.........    4,568,189       2,381,974
 Billings in excess of costs and estimated
   earnings on jobs in process....................     (558,555)        220,605
 Reserve for contingencies........................    1,349,000            --
                                                   ------------    ------------
       Net cash used in operating activities......     (161,544)     (2,756,232)
                                                   ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Cash divested upon sale of Kelar Controls, Inc...      (53,750)           --
 Proceeds from sale of machinery and equipment....       99,500         184,799
 Capital expenditures.............................     (198,228)       (358,464)
                                                   ------------    ------------
       Net cash used in investing activities......     (152,478)       (173,665)
                                                   ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Cash overdraft...................................         --          (478,696)
 Net proceeds from notes payable..................    2,795,333         115,034
 Principal payments on notes payable..............   (3,280,400)        (43,788)
 Principal payments on long-term debt.............     (195,264)     (2,463,514)
 Proceeds from stockholder line of credit.........    1,120,800       4,908,317
 Issuance of common stock.........................         --         1,000,000
                                                   ------------    ------------
       Net cash provided by financing activities..      440,469       3,037,353
                                                   ------------    ------------
Net increase in cash..............................      126,447         107,456

Cash at beginning of period.......................      178,231          70,775
                                                   ------------    ------------
Cash at end of period............................. $    304,678    $    178,231
                                                   ============    ============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

Page 24
<PAGE>
                                EIF HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1997 AND 1996

Note 1 Summary of Significant Accounting Policies

Organization and Basis for  Presentation:  EIF Holdings,  Inc.  (the"Company" or
"EIF"), is a Hawaii corporation  incorporated on July 25, 1989. The accompanying
consolidated  financial  statements  include the accounts of the Company and its
wholly-owned  subsidiaries;  P.W.  Stephens  Services,  Inc.  and P.W.  Stephens
Contractors,  Inc.  collectively  referred to as "P.W.  Stephens St. Louis"("St.
Louis"), and P.W. Stephens Residential, Inc.("Residential"), (which was formerly
combined with P.W. Stephens Contractors, Inc. and QHI Stephens Inc. and referred
to as "P.W.  Stephens").  The P.W. Stephens  Contractors,  Inc. and QHI Stephens
Contractors,  Inc.  subsidiaries  were  discontinued  in May 1997 and have  been
accounted for as discontinued  operations for all current periods reported under
this  Form  10-KSB.  Kelar  Controls,  Inc.  was  divested  on  June  30,  1997,
accordingly their operations are reflected through that date in the consolidated
financial   statements.   On  November  19,  1997,  the  Company  completed  its
acquisition of JL Manta, Inc. ("Manta"),  an Illinois  corporation.  Pursuant to
the terms of a Stock  Purchase  Agreement,  dated as of September 30, 1997,  the
Company  acquired all of the issued and  outstanding  common stock, no par value
per share,  of Manta  from the  stockholders  of Manta.  The  audited  financial
statements of Manta as well as the pro forma financial  information  showing the
effect of the  acquisition  will be filed  within 60 days of  December  4, 1997,
pursuant to the  provisions  in paragraph  (a)(4) of FORM 8-K. All  intercompany
transactions and balances have been eliminated in consolidation.

Use of Estimates:  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements and
the  accompanying  notes.  Actual results could differ from these  estimates and
such differences may or may not be material.

Revenue  and  Cost  Recognition:   The  Company  recognizes  revenues  from  its
industrial  maintenance  services  under  time  and  material  and  fixed  price
contracts.  The Company recognizes revenues and related profit from its time and
material   contracts   based   on   costs   incurred.    Contracts   using   the
percentage-of-completion  method  recognize  revenues  by  comparing  the  costs
incurred  to date to the total  estimated  costs.  The  percentage-of-completion
method of accounting can result in the recognition of either costs and estimated
earnings in excess of  billings  or  billings  in excess of costs and  estimated
earnings  on  uncompleted   contracts,   which  are  classified  as  assets  and
liabilities,  respectively,  in the accompanying consolidated balance sheet. The
asset  represents  costs  incurred and revenue  earned but not yet billed to the
customer on  uncompleted  contracts.  The liability  represents  billings to the
customer in excess of revenues earned on uncompleted contracts.

Inventory:  Inventory  consists primarily of operating supplies and is stated at
the lower of cost,  determined using the first-in,  first-out (FIFO) method,  or
market.

Machinery   and   Equipment:   Machinery  and  equipment  are  stated  at  cost.
Depreciation  of machinery and  equipment is provided over the estimated  useful
lives of the respective  assets using the straight-line  method,  generally from
three to five years.

Expenditures  for additions,  major renewals and betterments are capitalized and
expenditures for maintenance and repairs are charged to earnings as incurred.

When  machinery  and  equipment  are retired or otherwise  disposed of, the cost
thereof  and the  applicable  accumulated  depreciation  are  removed  from  the
respective accounts and the resulting gain or loss is reflected in earnings.

Goodwill:  Goodwill  is  amortized  on a  straight-line  basis  over  20  years.
Management  reviews, on an annual basis, the carrying value of goodwill in order
to determine whether an impairment has occurred.  Impairment is based on several
factors including the Company's projection of future undiscounted operating cash
flows.  If an  impairment  of the  carrying  value were to be  indicated by this
review, the Company would adjust the carrying value of goodwill to its estimated
fair value.

Long-Lived Assets: In 1996 the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 121,  "Accounting for the impairment of Long-Lived Assets
and Assets to be Disposed Of" which requires that long-lived  assets and certain
intangibles to be held and used by the Company be reviewed for  impairment.  The
adoption  of  SFAS  121  did  not  have  a  material  affect  on  the  Company's
consolidated financial statements.

Page 25
<PAGE>
Income Taxes:  The Company  utilizes SFAS No. 109,  Accounting for Income Taxes,
which  requires an asset and  liability  approach to  financial  accounting  and
reporting for income taxes. The difference  between the financial  statement and
tax bases of assets and liabilities is determined annually.  Deferred income tax
assets and liabilities are computed for those  differences  that have future tax
consequences  using the  currently  enacted tax laws and rates that apply to the
periods  in  which  they  are  expected  to  affect  taxable  income.  Valuation
allowances are  established,  if necessary,  to reduce the deferred tax asset to
the amount that will more likely than not be realized. Income tax expense is the
current tax payable or refundable for the period plus or minus the net change in
the deferred tax assets and liabilities.

Income tax expense  includes  federal and state taxes currently  payable and the
change in deferred taxes arising from temporary  differences  between income for
financial reporting and income tax purposes.

Net Loss Per Share:  The net loss per share  amounts for 1997 and 1996 have been
computed  by  dividing  net  loss  by the  weighted  average  number  of  shares
outstanding during the respective periods.

Major  Customers:  For the years ended  September 30, 1997 and 1996, no customer
accounted for more than 10% of revenue.

Surety  Bonds:  The  Company  has  purchased  a surety  bond for a job  totaling
approximately  $450,000 as of September 30, 1997. The bond is  collateralized by
account receivables.

In February 1997, The Financial  Accounting Standards Board Issued Statement No.
128,  Earnings Per Share,  which is required to be adopted on December 31, 1997.
At that time,  the Company will be required to change the method  currently used
to compute  earnings per share and to restate all prior  periods.  Under the new
requirements for calculating  primary earnings per share, the dilutive effect of
stock options will be excluded.  The impact of statement 128 on the  calculation
of fully diluted earnings per share is not expected to be material.

Stock  Based  Compensation:   The  disclosure   requirements  of  SFAS  No.  123
"Accounting for Stock-Based Compensation",  became effective January 1, 1996 for
all stock based compensation plans. SFAS No. 123 requires the recognition of, or
disclosure of, compensation  expense for grants of stock options or other equity
instruments issued to  employees  based on the fair  value at the date of grant.
However the statement also allows an entity  to continue to measure compensation
costs for those  plans  using the  method  prescribed  in APB  Opinion  No.  25,
"Accounting for Stock Issued to Employees". Those entities which elect to remain
with the  accounting in APB No.25 are required to include pro forma  disclosures
of net  income  and  earnings  per  share as if the fair  value-based  method of
accounting  had been applied.  The Company has elected to account for such plans
under the  provisions  of APB No. 25. There has been no effect on the  Company's
financial position as a result of this pronouncement.

Fair Value of Financial Instruments: The Company's financial instruments consist
of cash and cash equivalents,  accounts  receivable,  accounts payable and notes
payable.  The Company  believes that the carrying value of these  instruments on
the accompanying balance sheet approximates their fair value.

Reclassifications:  Certain  reclassifications  have  been  made to  prior  year
financial statements to conform with the current year presentation.

Page 26
<PAGE>
NOTE 2 - ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

                                                    1997            1996
                                                ------------    ------------
         Billed completed contracts............ $  2,719,737    $  4,861,695
         Billed contracts in progress..........    1,273,515       3,022,206
         Unbilled retention....................       39,115         202,481
                                                ------------    ------------
                                                   4,032,367       8,086,382
         Less allowance for doubtful accounts..     (225,000)       (787,323)
                                                ------------    ------------
                                                $  3,807,367    $  7,299,059
                                                ============    ============
NOTE 3 - SECURITIES AVAILABLE FOR SALE

Securities  available for sale consist of 570,333  common shares of American Eco
Corporation  ("AEC").  These shares were issued to the Company by AEC in lieu of
cash in conjunction with the Amendment dated September 30, 1997, to the existing
line of credit which  increased the maximum  borrowing  amount under the line to
$20,000,000.  These  securities  reflect  a value  of  $9.75  per  share  on the
consolidated balance sheet, which was the market value on the date of issue. The
Company  intends to sell these  securities  to settle  certain of the  Company's
existing obligations. Subsequent to September 30, 1997, the Company has received
proceeds  of  approximately  $3,000,000  from  the  sale of a  portion  of these
securities.  See NOTE 9 - NOTE PAYABLE DUE TO SHAREHOLDER  and NOTE 15 - RELATED
PARTY TRANSACTIONS for additional disclosures.


NOTE 4 - NOTE RECEIVABLE

On June 30, 1997, the Company sold all of the issued and  outstanding  shares of
stock in its  wholly  owned  subsidiary,  Kelar  Controls,  Inc.  to  Regal  Oak
Properties,  Inc. for  $2,500,000.  Pursuant to the  aquisition  agreement,  the
Company  received a Promissory  Note for the full amount of the purchase  price.
The note  matures  on June 30,  1998,  bears  interest  at 10% and is secured by
performance  bonds.  See  NOTE  -  18  DISCONTINUED  OPERATIONS  for  additional
disclosure.


NOTE 5 - COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS

Costs and estimated earnings on uncompleted contracts consist of the following:

                                                    1997            1996
                                                ------------    ------------
           Costs incurred on contracts in
            progress........................... $  2,188,031    $  6,841,353
           Estimated earnings..................      413,922         514,020
                                                ------------    ------------
                                                   2,601,953       7,355,373
           Less: billings to date..............    2,728,871       7,766,506
                                                ------------    ------------
                                                $   (126,918)   $   (411,133)
                                                ============    ============

The amounts above are included in the  accompanying  consolidated  balance sheet
under the following captions:

          Costs and estimated earnings in
           excess of billings on contracts
           in progress......................... $     52,003    $    326,343
               

          Billings in excess of costs and
           estimated earnings on contracts
           in progress.........................     (178,921)       (737,476)
                                                ------------    ------------
                                                $   (126,918)   $   (411,133)
                                                ============    ============

NOTE 6 - RECEIVABLE, OFFICER

The receivable,  officer is an amount due from Frank Fradella,  President of the
Company.  The receivable was transferred  from AEC when Mr. Fradella assumed his
position as President  of the  Company.  This amount  represents  the  remaining
balance of a five year forgiveable loan made to Mr. Fradella upon his employment
with AEC in September  1996. The balance is forgiven in annual  installments  of
$70,000 upon Mr. Fradella's  continued  employment with the Company.  The amount
due bears no interest and is unsecured.

Page 27
<PAGE>
NOTE 7 - MACHINERY AND EQUIPMENT

Machinery and equipment consisted of the following:
                                                     1997            1996
                                                 ------------    ------------

           Equipment............................ $    814,199    $  2,283,788
           Leasehold improvements...............       97,439         647,696
           Furniture, fixtures and
            office equipment....................      196,244         888,228
           Vehicles.............................      514,944         238,477
           Vehicles and equipment
            under capitalized leases............         --         1,260,447
                                                 ------------    ------------
                                                    1,622,827       5,318,636
           Accumulated depreciation
              (including $0 and $1,076,435
              at September 30, 1997 and 1996,
              respectively, attributable to
              capitalized leases)...............    1,018,887       4,043,549
                                                 ------------    ------------
                                                 $    603,940    $  1,275,087
                                                 ============    ============

The cost fully  depreciated  assets  still in service  amounted  to  $531,127 at
September 30, 1997 and $2,655,341 at September 30, 1996.

NOTE 8 - Notes Payable

Notes payable consists of the following:
                                                     1997            1996
                                                 ------------    ------------

Note payable, due to a party related through
common ownership, due March 1, 1998, at  10%
rate of  interest, unsecured...................  $  1,030,000    $    225,000  

Notes payable, finance company for insurance
premiums, due August 31, 1998. Payable $59,208
monthly including interest at 7.64%, secured
by unearned premiums...........................       598,364            --


Bank line  of credit  secured by  certain  
contracts,   receivables,  inventory  and
equipment. The note matured on February  10,
1996 and was in  default as of September 30,
1996. Interest is payable  at the  rate of 
prime plus .75%. The note was guaranteed by 
a major shareholder............................         --            130,162  

Notes payable, secured  by certain  accounts
receivable pledged as collateral. The Company
may borrow up to 65% of the accounts receivable.
The  Note  must  be  repaid  to the extent the 
account  receivable  is collected  or is  no 
longer eligible. The annual interest  rate is
28%. The  note was  guaranteed  by  a major
shareholder....................................         --           130,000  


Note payable,   bank, payable on April 2, 1997.
Interest payable  monthly  at prime plus 2%. 
The Company may borrow  up  to  70% of its 
eligible   contracts  receivables  with a 
maximum  availability  of  $1,200,000  at  
September  30,  1996.  Maximum  availablity 
decreases by $200,000 each month until the
line of credit is  paid  off.  Secured by 
accounts receivables, inventory and
guarantee of major shareholder.................         --         1,200,000   


Notes payable, due to related party, due
December 1996, at 10% rate of interest.........         --            60,000


Miscellaneous  notes  payable..................       66,713          80,376
                                                ------------    ------------ 
                                                $  1,695,120    $  1,825,538
                                                ============    ============
Page 28
<PAGE>
NOTE 9 - Note Payable Due to Stockholder

During the fiscal year ended September 30, 1996, the Company entered into a line
of credit agreement with a major stockholder,  American Eco Corporation  ("AEC")
The original  terms of the AEC facility  carried a maximum  borrowing  amount of
$5,250,000,  interest  at the prime rate plus 2% per annum,  was  unsecured  and
matured on July 31, 1997.  Effective  July 31, 1997 the line of credit  facility
with AEC was renewed,  extended  and modified to increase the maximum  borrowing
amount to  $15,000,000  and extend the maturity to February 18, 1998.  All other
terms  under  the  original  line of credit  agreement  remained  unchanged.  On
September  30,  1997,  AEC  executed  another  amendment  to the line of  credit
facility  increasing the maximum borrowing amount to $20,000,000.  For the years
ended September 30, 1997 and 1996, the total amounts  outstanding  under the AEC
facility were $17,609,424 and $4,908,317 respectively. Included in these amounts
are accrued interest of $835,311 and $160,326  respectively.  The renewal of the
line of credit  facility  also  provides  AEC an option to  convert  the  entire
outstanding  principal  amount of the line of credit plus any  accrued  interest
outstanding at the time of conversion,  into common shares of EIF Holdings, Inc.
subject to stockholder  approval to increase the number of authorized shares. No
guarantee can be made that stockholder approval will be obtained. The conversion
price for each  common  share is equal to 85% of the five day  weighted  average
closing  price of the  common  shares as quoted  in the  over-the-counter  "pink
sheets" immediately prior to the conversion date.


NOTE 10 - Long-Term Debt
                                                    1997            1996
                                                ------------    ------------

Note payable, bank, due in monthly 
installments of $2,333 plus interest at 
prime plus 1% per annum........................ $       --      $     16,344

Notes payable,  bank for transportation  
equipment,  interest varying from 7.25% to
9.00%, secured by transportation equipment.....         --            37,808

Various capital leases.........................         --            50,953
                                                ------------    ------------
                                                        --           105,105   
Less current portion...........................         --            31,213  
                                                ------------    ------------
Long-term debt................................. $       --      $     73,882 
                                                ============    ============

NOTE 11 - Leases

As Lessee:

The Company leases office and warehouse space under operating leases that expire
at various times through 2002.

Future minimum  payments,  by year and in the aggregate,  under these  operating
leases, consisted of the following at September 30, 1997:

           1998................................ $    213,546
           1999................................      177,790
           2000................................      131,316
           2001................................      114,420
           2002................................       66,745 
                                                ------------
          Total minimum lease payments......... $    703,817              
                                                ============

Rent  expense  for the years  ended  September  30,  1997 and 1996  amounted  to
$300,778 and $521,500,  respectively.  See NOTE 14 - RELATED PARTY  TRANSACTIONS
for additional disclosures.

As Lessor:

Subsequent  to  September  30,  1997,  the Company  entered into an agreement to
sub-lease an office and warehouse facility to a third party from January 1, 1998
to July 31, 2002.  Future minimum rents  receivable under  noncancelable  leases
are:

           1998................................ $     67,330
           1999................................       89,800
           2000................................      101,000
           2001................................      102,100
           2002................................       59,558
                                                ------------
          Total minimum rents receivable....... $    419,788
                                                ============
Page 29
<PAGE>
NOTE 12 - CASH FLOW INFORMATION

For purposes of the  Statement of Cash Flows,  the Company  considers all highly
liquid debt instruments  purchased with a maturity of three months or less to be
cash equivalents.


                                                    1997            1996
                                                ------------    ------------

Supplemental disclosures of cash flow 
  information:  
Cash paid (refunded) for:
     Interest.................................. $    613,260    $    225,523
     Income taxes.............................. $       --      $   (163,322)

Supplemental schedule of noncash investing
  and financing activities:
     Machinery and equipment acquired 
       through capitalized lease
       obligations............................. $       --      $    150,212
     Machinery and equipment acquired
       through long term-debt.................. $     22,565    $       --

See NOTE-3 SECURITIES AVAILABLE FOR SALE and NOTE-18 DISCONTINUED OPERATIONS for
additional disclosures.

NOTE 13 - PROVISION FOR INCOME TAXES

A provision for income taxes has not been recorded due to the Company's  current
year losses and net operating loss carryforwards. The components of the deferred
income tax provision are as follows:
         
                                                    1997            1996
                                                ------------    ------------  
Deferred income tax expense components:
  Allowance for doubtful accounts.............. $    376,500    $    176,000
  Contingent liabilities.......................      501,000            --
  Loss on construction in process..............     (139,000)        139,000
  Net operating loss, current year.............    1,339,000       1,052,000
  Other........................................       (7,500)         50,000
  Valuation allowance..........................   (2,070,000)     (1,417,000)
                                                ------------    ------------
                                                $       --      $       --
                                                ============    ============
A reconciliation  of income tax at the statutory rate to the Company's effective
rate is as follows:
                                                    1997            1996
                                                ------------    ------------  
                                                           %               %
  Statutory federal income tax rate............      (34)            (34)
  State income taxes...........................       (1)             (1)
  Net operating loss carryforward..............       35              35 
                                                ------------    ------------
                                                      --              --
                                                ============    ============
The components of deferred income taxes are as follows:
                                                    1997            1996
                                                ------------    ------------  
Current:
  Allowance for doubtful accounts.............. $    552,500    $    176,000
  Accelerated depreciation.....................       20,500           5,000
  Accrued vacation pay.........................         --            28,000
  Loss on construction in process..............         --           139,000
  Contingent liabilities.......................      501,000            --
  Net operating loss carry forward.............    2,894,000       1,550,000 
  Valuation allowance..........................   (3,968,000)     (1,898,000)
                                                ------------    ------------
                                                $       --      $       --
                                                ============    ============

The  liability  method of  accounting  for  deferred  income  taxes  requires  a
valuation  allowance  against  deferred  tax assets  if,  based on the weight of
available evidence,  it is more likely than not that some or all of the deferred
tax assets will not be realized.  The Company  established a valuation allowance
against  deferred tax assets of $3,968,000  and $1,898,000 at September 30, 1997
and 1996, respectively.

The Company has net operating loss carryforwards of approximately $8,500,000 and
$4,500,000 at September 30, 1997 and 1996  respectively,  for federal income tax
purposes  available to offset future financial  income,  expiring,  if not used,
periodically  through the year 2012. A portion of the net  operating  loss carry
forwards are subject to an annual limitation of approximately $350,000.

Page 30
<PAGE>
NOTE 14 - LITIGATION, COMMITMENTS AND CONTINGENCIES

Borrowings from American Eco Corporation (AEC) were the Company's primary source
of funding for fiscal 1997.  The balance due to AEC as of September 30, 1997 was
$17,609,424  compared  to  $4,908,000  for the same period in fiscal  1996.  The
original  terms of the AEC  facility  carried  a  maximum  borrowing  amount  of
$5,250,000,  interest  at the prime rate plus 2% per annum,  was  unsecured  and
matured on July 31, 1997.  Effective  July 31, 1997 the line of credit  facility
with AEC was renewed,  extended  and modified to increase the maximum  borrowing
amount to $15,000,000 and extend the maturity to February 18, 1998. On September
30, 1997 the borrowing  amount was increased  further to $20,000,000.  All other
terms  under the  original  line of credit  agreement  remained  unchanged.  The
renewal of the line of credit also  provides AEC an option to convert the entire
outstanding  principal  amount of the line of credit plus any accrued and unpaid
interest  outstanding  at the time of  conversion,  into  common  shares  of the
Company,  subject to  shareholder  approval to increase the number of authorized
shares.  The conversion  price for each common share is equal to 85% of the five
day  weighted  average  closing  price of the  common  shares  as  quoted in the
over-the-counter "pink sheets" immediately prior to the conversion date.
The nature and scope of the Company's business  operations bring it into regular
contact  with the  general  public,  a  variety  of  businesses  and  government
agencies.  These  activities  inherently  subject  the Company to the hazards of
litigation,  which are defended in the normal course of business. The Company is
currently involved in several lawsuits and investigations  including  regulatory
compliance.  Although the outcome of these claims is not clearly determinable at
the  present  time,   Management  believes  that  such  proceedings  are  either
adequately covered by insurance, or if uninsured, by the estimated losses it has
recorded to date. The resolution of such claims,  however, could have a material
effect on the Company's  results of  operations or cash flows.  The reserves for
litigation and other  contingencies  recorded by the Company as of September 30,
1997 amounted to $1,349,000.


NOTE 15 - RELATED PARTY TRANSACTIONS

The  Company  is  involved  in  various   related  party   transactions.   These
transactions are summarized as follows:

Pursuant to a Management  Services  Agreement  effective October 1, 1996 between
AEC and the Company,  AEC had agreed to provide certain  services to the Company
in exchange for a management fee to be paid on a quarterly  basis.  The services
include  providing the Company with management  guidance as well as guaranteeing
certain of the Company's  obligations with its creditors,  in order to allow the
Company to receive  favorable terms with its creditors.  The agreement  provides
for a quarterly payment of $1,000,000. AEC stopped providing management services
to the Company  shortly after the appointment of Frank Fradella as President and
CEO of the Company in May 1997.  Therefore the  management fee was pro-rated for
the third  quarter and amounted to $300,000.  For the year ended  September  30,
1997, total management fees were $2,300,000.

During 1996 the Company leased equipment under capitalized leases from an entity
that is 100% owned by a stockholder with interest rates of approximately 13% per
annum.  The  Company  incurred   interest  expense  to  this  related  party  of
approximately  $116,675 for the year ended  September 30, 1996. At September 30,
1996, this leased equipment was reflected on the Company's  financial records as
follows: (a) cost $1,203,303,  (b) accumulated  depreciation  $1,022,476 and (c)
capital lease obligation $93,782.  During the year ended September 30, 1997, the
lease obligation was paid off.
         
The Company also leased warehouse and office facilities under an operating lease
from an entity that is owned by this same stockholder. The Company incurred rent
expense of $55,000  and  $156,313  for the years ended  September  30, 1997 and
1996, respectively.

NOTE 16 - WARRANTS AND OPTIONS

In connection  with funds  advanced to the Company under a promissory  note, and
subsequent  amendments and  extensions to the note issued by an investor  group,
the Company  committed to issue  480,000  warrants,  to purchase  the  Company's
common stock. These warrants are subject to shareholder  approval of an increase
in the  authorized  number of  outstanding  shares.  The  exercise  price of the
warrants will be equal to the market value on the date of issue.

In connection  with a non-registered  offering of the  Company's common stock in
1994, 714,286 warrants were issued. The warrants  had an exercise price of $1.40
per share and expired in June 1997. 


NOTE 17 - RETIREMENT PLAN

The Company,  through its collective  bargaining agreements with various unions,
contributes to the unions'  retirement  plans. For the years ended September 30,
1997 and 1996,  an expense of  $151,005  and  $151,396  was  incurred  for these
retirement plans, respectively.

Effective  November 1, 1996 the Company adopted  a tax-deferred  retirement plan
under  Section  401(k) of the  Internal  Revenue  Code.  The Company may, at its
discretion, make profit-sharing contributions to the plan out of its profits for
the  plan  year.  No  matching  contributions  were  made  for  the  year  ended
September 30, 1997.

Page 31
<PAGE>

NOTE 18 - DISCONTINUED OPERATIONS

Commercial Asbestos

In May  1997,  the  Company  decided  to  discontinue  the  commercial  asbestos
operations of P. W. Stephens Contractors,  Inc. ("PWSC") and QHI Stephens,  Inc.
("QHI").  The results of operations  for the  respective  periods  presented are
reported as a component of  discontinued  operations  in the current year of the
consolidated  statements  of  operations.  The  net  loss  of  these  operations
subsequent  to September  30, 1997 are included in the  statements of operations
under discontinued operations and therefore revenues, cost of revenue,  selling,
general and administrative expenses associated with the discontinued operations.

The following tables  summarizes  results of operations for PWSC and QHI for the
years ended:
                                                    1997            1996
                                                ------------    ------------
          Net sales............................ $  7,059,949    $ 13,876,959
          Operating loss.......................   (5,765,745)     (3,305,164)
          Loss from discontinued 
           operations..........................   (5,765,745)     (3,305,164) 

The following table  summarizes the net liabilities  related to the discontinued
operations of PWSC and QHI for the year ended:
                                                 September 30,
                                                      1997
                                                 ------------
          Net working capital deficit........... $ (1,930,988)
          Machinery and equipment, net..........      154,947
                                                 ------------
          Net liabilities related to 
           discontinued operations.............. $ (1,776,041)
                                                 ============

Included in the current  liabilities  at September  30, 1997 is a provision  for
loss on  discontinued  operations of $300,000 which consists of estimated  costs
associated with the disposal and operating  losses expected through February 28,
1998,  the phase out period.  During the current year,  the Company sold certain
machinery and  equipment  with a net  book  value  of  $258,933  related  to the
discontinued  operations that could not be used in the existing businesses.  The
Company received proceeds of $99,950 for the sale of those assets resulting in a
loss on disposition of assets in the amount of $156,863. The remaining machinery
and  equipment  consists  of vehicles  that will be  utilized  in the  Company's
ongoing operations.


Sale of Kelar

As of June 30,  1997,  the Company  completed  the sale of all of the issued and
outstanding  shares of Kelar Controls,  Inc.  ("Kelar") to Regal Oak Properties,
Inc. ("Regal Oak") for $2,500,000.  Pursuant to the Acquisition  Agreement,  the
Company  received a Promissory  Note for the full  purchase  price.  The note is
payable in one (1)  installment due June 30, 1998,  accrues  interest at 10% per
annum and is secured by performance  bonds totaling  $2,500,000.  The results of
operations for the respective  periods  presented are reported as a component of
discontinued  operations  in the current year of the  consolidated  statement of
operations.

Page 32
<PAGE>

The following are the  summarized  results of operations for Kelar for the years
ended September 30,:

                                                    1997            1996
                                                ------------    ------------
          Net sales............................ $  1,089,277    $    660,983
          Operating loss.......................      (86,672)       (469,346)
          Loss from discontinued operations....      (86,672)       (469,346)


NOTE 19 - SUBSEQUENT EVENTS

JL Manta,  Inc.

On November 19, 1997, the Company  completed its  acquisition of JL Manta,  Inc.
("Manta"),  an  Illinois  corporation  which  provides  specialized  maintenance
services for clients in the  industrial,  environmental  and  low-level  nuclear
sectors.  Pursuant  to the  terms of a Stock  Purchase  Agreement,  the  Company
acquired all of the issued and outstanding common stock, no par value per share,
of Manta  (the  "Manta  Stock")  from the  stockholders  of  Manta  (the  "Manta
Stockholders")for   consideration  of  $4,725,321  in  cash  and  $2,235,312  in
convertible  promissory  notes of the Company,  payable in  installments  with a
final payment due on November 18, 2000 (the "Stockholder Notes"). Subject to the
approval  by  the  Company's  stockholders  of an  amendment  to  EIF's  charter
authorizing  the requisite  amount of stock, at any time after June 30, 1998 the
holders of the Stockholder Notes may convert any principal payment due under the
Stockholder Notes into shares of EIF's common stock, no par value per share (the
"EIF Stock"),  at a conversion price equal to the closing  transaction  price of
the  EIF  Stock  on  the  date a  conversion  notice  is  received  by EIF  (the
"Conversion  Price").  Concurrent with the closing of the  Acquisition,  certain
Manta  Stockholders  and key employees  entered into Retention Bonus  Agreements
with EIF providing for bonus payments in the aggregate  amount of $900,000 to be
made by the Company over a three year period.

Also concurrently with the Acquisition, in connection with financing provided to
the Company,  the Company issued a $6,500,000  Convertible  Promissory Note. The
Note bears interest at the rate of 5 1/4% per annum, becomes due on May 18, 1999
and is secured by a pledge of all of the Manta Stock. Subject to approval of the
Company's  Stockholders  of  an  amendment  to  EIF's  charter  authorizing  the
requisite  amount of preferred and common stock,  the Note is convertible into 5
1/4% preferred  convertible  stock at a conversion price of One Dollar $1.00 per
share, with such preferred convertible stock convertible into EIF common stock.

Page 33
<PAGE>
Also  in  connection  with  the  acquisition,   the  Company  issued  $2,500,000
Promissory  Note.  The note bears  interest at the rate of Nine Percent (9%) per
annum and becomes due on February 16, 1998.  The loan amount  represented by the
note was used by the Company to refinance certain indebtedness of Manta.

Manta has  working  capital and fixed asset  based  credit  facilities  which it
utilizes  in the normal  course of  business.  Essentially  all of the assets of
Manta are pledged as security  under one or more of these  facilities.  The loan
agreements which govern these facilities  contain typical  covenants,  including
financial covenants, with which the Company must comply.

Debt.

In December  1997,  the  Company,  through its Manta  subsidiary  has received a
credit facility  commitment with LaSalle Bank, which tentatively  provides for a
$4,000,000 secured revolver for working capital financing,  a $1,300,000 secured
standby  letter of credit for  workers  compensation  and a  $5,500,000  secured
installment loan to refinance the existing term debt.  Principal on the revolver
is payable on demand up to one year from the date of closing.  The principal due
on the  standby  letter of credit is two years  from the  closing  date and five
years from closing on the installment loan. The note is secured by substantially
all of the assets of Manta and  requires  the  maintenance  of normal  financial
covenants and performance ratios.

                
NOTE - 20 INDUSTRY SEGMENT DATA

The Company operates in two principal  industries;  (a.) Industrial,  commercial
and  governmental   Environmental  Remediation  Services  and  (b.)  residential
asbestos abatement.  It is the Company's policy to price intersegment  contracts
on an  equivalent  basis  to that  used  for  pricing  external  contracts.  The
following is a summary of selected financial data for these business segments:

                                                     Years Ended September 30,
                                                   ----------------------------
                                                       1997             1996
                                                   ------------    ------------

Revenue
  Environmental remediation services.............. $  7,293,082    $  6,353,658
  Residential asbestos abatement..................    6,141,341       6,647,683
                                                   ------------    ------------
    Total revenue................................. $ 13,434,423    $ 13,001,341
                                                   ============    ============
Operating income (loss)
  Environmental remediation services.............. $    (57,247)   $   (504,704)
  Residential asbestos abatement..................    1,579,985         570,607
                                                   ------------    ------------ 
    Total operating income........................    1,522,738          65,902 
Corporate Expenses................................   (3,226,486)     (1,185,251)
Interest Expense..................................   (1,434,992)       (256,448)
Other.............................................       10,189         (59,413)
                                                   ------------    ------------
    Loss before provision for income taxes........ $ (3,128,551)   $ (1,435,210)
                                                   ============    ============
Depreciation and amortization
  Environmental remediation services.............. $    213,328    $    269,465
  Residential asbestos abatement..................       97,772          33,627
  Corporate.......................................        3,856             312
                                                   ------------    ------------
    Total depreciation and amortization........... $    314,956    $    303,404
                                                   ============    ============
Page 34
<PAGE>

Capital expenditures
  Environmental remediation services.............. $     10,692    $    230,141
  Residential asbestos abatement..................      135,616          21,553
  Corporate.......................................       31,388           2,679
                                                   ------------    ------------
    Total capital expenditures.................... $    177,696    $    254,373
                                                   ============    ============
Identifiable Assets
  Environmental remediation services.............. $  3,955,112    $  1,581,330
  Residential asbestos abatement..................    1,538,278       4,655,635
  Corporate.......................................    9,182,596       4,338,538
                                                   ------------    ------------
    Total capital expenditures.................... $ 14,675,986    $ 10,575,503
                                                   ============    ============




NOTE 21 - FOURTH QUARTER ADJUSTMENTS

During the fourth  quarter of fiscal 1996,  the Company  recorded the  following
adjustments:

   Recognized approximately $400,000 of legal fees associated with a former 
     stockholder and officer.

   Recorded additional reserves for allowance for doubtful accounts in the 
     amount of approximately $600,000. 

   Recognized approximately $400,000 for losses incurred on work in progress.


Page 35
<PAGE>


             [letterhead of Karlins, Fuller Arnold & Klodosky P.C.]


To the Stockholders and Directors of 
EIF HOLDINGS, INC.


                          Independent Auditor's Report
                          ----------------------------

We have audited the  accompanying  consolidated  balance  sheet of EIF HOLDINGS,
INC. as of September 30, 1997 and 1996 and the related  consolidated  statements
of  operations,  stockholders'  equity and cash flows for the years then  ended.
These consolidated  financial statements are the responsibility of the Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards  require that we plan and perform the audit to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of EIF HOLDINGS, INC. at September
30,  1997 and 1996,  and the  results of its  operations  and cash flows for the
years then ended in conformity with generally accepted accounting principles.


/s/ Karlins, Fuller, Arnold & Klodosky, P.C.
--------------------------------------------


Houston, Texas
December 18 1997

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<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

Not applicable


PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT.

The  information  required  by this  item is set forth in the  section  entitled
"Information  Concerning  Directors  and  Nominees"  contained in the  Company's
definitive  Proxy Statement to be filed with Securities and Exchange  Commission
("the Proxy  Statement") in connection with the Company's 1998 Annual Meeting of
Stockholders, and such information is incorporated herein by reference.


ITEM 10. EXECUTIVE COMPENSATION

Remuneration  of the directors and officers and  information  related thereto is
included in the section entitled "Executive  Compensation and Other Information"
contained in the Proxy Statement, and said information is incorporated herein by
reference.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security  ownership of management and certain  beneficial owners and information
related  thereto is included  in the section  entitled  "Voting  Securities  and
Principal  Holders  Thereof"   contained  in  the  Proxy  Statement,   and  said
information is incorporated herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with management and related parties and information related thereto
is  included  in  the  section  entitled  "Certain   Relationships  and  Related
Transactions"  contained  in  the  Proxy  Statement,  and  said  information  is
incorporated herein by reference.

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<PAGE>

ITEM 13.  EXHIBIT AND REPORTS ON FORM 8-K

(a)  Exhibits
     The following documents are filed (separately) as exhibits to this report:


 Regulation S-B
 Exhibit Number


      2.1      Exchange of Stock  Agreement and Plan of  Reorganization  between
               EIF Holdings,  Inc. ("EIF") and P.W. Stephens  Contractors,  Inc.
               [filed as an Exhibit to the Current Report of the Company on Form
               8-K for the  Date of Event  January  31,  1993  and  incorporated
               herein by reference].
       
 
      2.2      Acquisition  Agreement  between EIF and Von Guard Holdings,  Inc.
               and its subsidiaries  [filed  as an Exhibit to the Current Report
               of the  Company on Form 8-K for the Date of Event  August 2, 1994
               and incorporated herein by reference].
     

      2.3      Sale of Stock Agreement by and between EIF, Kelar Controls,  Inc.
               and its shareholders [filed as an Exhibit to the Annual Report of
               the Company on Form 10-KSB for the fiscal year ended December 31,
               1994 and incorporated herein by reference].
                  
 
      3.1      Certificate  of  Incorporation,  as amended to date  [filed as an
               Exhibit to the Annual  Report of the  Company on Form  10-KSB for
               the fiscal year ended December 31, 1992 and  incorporated  herein
               by reference].
              
 
      3.2      Bylaws  [filed as an Exhibit to the Annual  Report of the Company
               on Form  10-KSB for the fiscal year ended  December  31, 1992 and
               incorporated herein by reference].
        
 
      4.1      Specimen  Common  Stock  certificate  [filed as an Exhibit to the
               Annual  Report of the  Company on Form 10-KSB for the fiscal year
               ended December 31, 1992 and incorporated herein by reference.
        
 
      4.2      Certificate  for Specimen "B", "C" and "D" Warrants  [filed as an
               Exhibit to the Annual  Report of the  Company on Form  10-KSB for
               the fiscal year ended December 31, 1992 and  incorporated  herein
               by reference].
     
 
      4.3      Extension of Class B Warrants [filed as an Exhibit to the Current
               Report of the  Company on Form 8-K for the Date of Event  October
               15, 1994 and incorporated herein by reference].
 
     10.1      Amended  Employment  Contract of Andreas O.  Tobler  [filed as an
               Exhibit to the Current  Report of the Company on Form 8-K for the
               Date of Event  September  7,  1994  and  incorporated  herein  by
               reference].

     10.2      NY-STAR Purchase Agreement between EIF Holdings, Inc. ("EIF") and
               Andreas O.  Tobler  [filed as an Exhibit to the Annual  Report of
               the Company on Form 10-KSB for the fiscal year ended December 31,
               1992 and incorporated herein by reference].
        
 
     10.3      Agreements  relating to Gertino/Block stock issuance [filed as an
               Exhibit to the quarterly report of the Company on Form 10-QSB for
               the quarter ended September 30, 1993 and  incorporated  herein by
               reference].

 
     10.4      Promissory  Note Line of Credit  Agreement,  dated March 1, 1996,
               with  American  Eco  Corporation  ("American  Eco")  [filed as an
               Exhibit to the Annual  Report of the  Company on Form  10-kSB for
               the year ended  September  30,  1996 and  incorporated  herein by
               reference].

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<PAGE>


     10.5      Agreement,  dated February 2, 1996,  between EIF and American Eco
               [filed as an Exhibit to the Current Report of the Company on Form
               8-K for the  Date of Event  February  2,  1996  and  incorporated
               herein by reference].
    
     10.6      Settlement  Agreement  and Mutual  Release,  dated April 4, 1996,
               among Kelar, Kelly McMahon,  and Larry Thomas (as plaintiffs) and
               EIF and the other  defendants  [filed as an Exhibit to the Annual
               Report of the Company on Form 10-kSB for the year ended September
               30, 1996 and incorporated herein by reference].
 
     10.7      Agreement  and  General  Release,  dated as of  November 8, 1996,
               among Richard Austin, EIF, PW Stephens and American Eco [filed as
               an Exhibit to the Annual Report of the Company on Form 10-kSB for
               the year ended  September  30,  1996 and  incorporated  herein by
               reference].
 
     10.8      Lease  Agreement,  dated  January  9,  1997,  between  Aetna Life
               Insurance  Company and EIF, for  premises in Anaheim,  California
               [filed as an Exhibit to the Annual  Report of the Company on Form
               10-kSB for the year ended  September  30,  1996 and  incorporated
               herein by reference].

     10.9      Management  Agreement  effective  October  1,  1996  between  the
               Company and  American  Eco Corp.  [incoporated  by  reference  to
               Exhibit  10.1 to the  Registrant's  Form  10-QSB for the  quarter
               ended December 31, 1996].
   
     10.10     Promissory  Note dated  December 13, 1996 between the Company and
               Truman  Harty.  [incoporated  by reference to Exhibit 10.2 to the
               Registrant's  Form  10-QSB for the  quarter  ended  December  31,
               1996].

     10.11     Revolving  Line of Credit  dated  September  1, 1996  between the
               Company and Turner  Holdings,  Inc.  [incoporated by reference to
               Exhibit  10.3 to the  Registrant's  Form  10-QSB for the  quarter
               ended December 31, 1996].

     10.12     Acquisition  Agreement  by and  between the Company and Regal Oak
               Properties,  Inc.  dated  June  30,  1997  for the  sale of Kelar
               Controls,  Inc.  [incoporated by reference to Exhibit 10.1 to the
               Registrant's Form 10-QSB for the quarter ended June 30, 1997].

     10.13     Secured  Promissory  Note  between  the  Company  and  Regal  Oak
               Properties,  Inc. dated June 30, 1997.  [incoporated by reference
               to Exhibit 10.2 to the  Registrant's  Form 10-QSB for the quarter
               ended June 30, 1997].

     10.14     Security  Agreement  Pledge  between  the  Company  and Regal Oak
               Properties,  Inc. dated June 30, 1997.  [incoporated by reference
               to Exhibit 10.3 to the  Registrant's  Form 10-QSB for the quarter
               ended June 30, 1997].

     10.15     Renewal,  Extension and  Enlargement  Promissory Note between the
               Company and Truman  Harty dated  April 4, 1997.  [incoporated  by
               reference to Exhibit 10.4 to the Registrant's Form 10-QSB for the
               quarter ended June 30, 1997].
 
     10.16     Stock Purchase  Agreement,  dated  September 30, 1997,  among EIF
               Holdings,  Inc. ("EIF") and each of the stockholders of JL Manta,
               Inc.[incoporated by reference to Exhibit 10.1 to the Registrant's
               Form 8-K for the date of event November 19, 1997].

Page 39
<PAGE>
 
     10.17     $6.5 Million  Convertible  Promissory Note issued by EIF to Deere
               Park Capital Management, Inc., as nominee for EIFH Joint Venture,
               L.L.C. and Certain Reg. D Hedge Funds.  [incoporated by reference
               to  Exhibit  10.2 to the  Registrant's  Form  8-K for the date of
               event November 19, 1997].

     10.18     $2.5 Million  Convertible  Promissory Note from EIF to Deere Park
               Capital   Management,   Inc.  ("Deere  Park").   [incoporated  by
               reference  to Exhibit 10.3 to the  Registrant's  Form 8-K for the
               date of event November 19, 1997].

     10.19     Convertible  Promissory Note of EIF, issued to Leo J. Manta.
               [incoporated  by reference  to Exhibit  10.4 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.20     Convertible  Promissory  Note of EIF,  issued to Steven A. Manta.
               [incoporated  by reference  to Exhibit  10.5 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.21     Convertible  Promissory Note of EIF, issued to Michael J. Chakos.
               [incoporated  by reference  to Exhibit  10.6 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.22     Convertible  Promissory  Note of EIF,  issued  to John L.  Manta.
               [incoporated  by reference  to Exhibit  10.7 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.23     Convertible Promissory Note of EIF, issued to the Alexander Manta
               Trust.   [incoporated   by  reference  to  Exhibit  10.8  to  the
               Registrant's Form 8-K for the date of event November 19, 1997].

     10.24     Convertible  Promissory  Note of EIF,  issued to the Erica  Manta
               Trust.   [incoporated   by  reference  to  Exhibit  10.9  to  the
               Registrant's Form 8-K for the date of event November 19, 1997].

     10.25     Convertible  Promissory  Note of EIF, issued to the Zachary Manta
               Trust.   [incoporated  by  reference  to  Exhibit  10.10  to  the
               Registrant's Form 8-K for the date of event November 19, 1997].

     10.26     Convertible  Promissory  Note of EIF,  issued  to Allen  DeLange.
               [incoporated  by reference to Exhibit  10.11 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.27     Convertible  Promissory  Note of EIF,  issued to Jon S. Claypool.
               [incoporated  by reference to Exhibit  10.12 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.28     Pledge  Agreement by and among EIF, Deere Park  Equities,  L.L.C.
               and Deere Park  Capital  Management,  Inc.,  as nominee  for EIFH
               Joint Venture,  L.L.C. and certain Reg. D Hedge Funds,  regarding
               $6.5 Million Promissory Note from EIF.  [incoporated by reference
               to  Exhibit  10.13 to the  Registrant's  Form 8-K for the date of
               event November 19, 1997].

     10.29     Security  Agreement  executed  by the  Company in favor of Harris
               [incoporated  by reference to Exhibit  10.14 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

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<PAGE>

     10.30     Subordination  Agreement  between  Harris and Deere Park  Capital
               Management,  Inc.  [incoporated  by reference to Exhibit 10.15 to
               the  Registrant's  Form 8-K for the date of  event  November  19,
               1997].

     10.31     Subordination  Agreement between Harris and EIF.  [incoporated by
               reference to Exhibit 10.16 to the  Registrant's  Form 8-K for the
               date of event November 19, 1997].

     10.32     Security   Agreement   between   Deere  Park  and  the   Company.
               [incoporated  by reference to Exhibit  10.17 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.33     Registration  Rights  Agreement  between  EIF  and  each  of  the
               Sellers.  [incoporated  by  reference  to  Exhibit  10.18  to the
               Registrant's Form 8-K for the date of event November 19, 1997].

     10.34     Employment  Agreement  between the Company and Michael J. Chakos.
               [incoporated  by reference to Exhibit  10.19 to the  Registrant's
               Form 8-K for the date of event November 19, 1997].

     10.35     Form of Registration Rights Agreement.  [incoporated by reference
               to  Exhibit  10.20 to the  Registrant's  Form 8-K for the date of
               event November 19, 1997].

     10.36     Form of Guaranty.  [incoporated  by reference to Exhibit 10.21 to
               the  Registrant's  Form 8-K for the date of  event  November  19,
               1997].


*    10.37     Renewal, Extension and Modification Revolving Line of Credit Note
               effective  July 1, 1997  between  the Company  and  American  Eco
               Corporation

*    10.38     Second   Amendment   Revolving  Line  of  Credit  Note  effective
               September   30,  1997   between  the  Company  and  American  Eco
               Corporation.

*    21        Subsidiaries of the Registrant 

*    27        Financial Data Schedule                                    

 
    
-----------------------------
*  Filed herewith


(b) Reports on Form 8-K

The Company did not file any Current Reports on Form 8-K during the three month
period ended September 30, 1997


Page 41
<PAGE>

SIGNATURES

In  accordance  with Section 13 or 15(d) of the Exchange  Act, EIF Holdings Inc.
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                 EIF HOLDINGS, INC.
                                 (Registrant)



                                 By: /s/J. Drennan Lowell
                                     ----------------------------------
                                     /s/J. Drennan Lowell,
                                     Vice President, Chief Financial 
                                     Officer and Treasurer
                                     (Principal financial officer)

Dated:  January 13, 1997



In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.



     By:  /s/Frank J. Fradella
          ----------------------------------            Dated: January 12, 1998
          Frank J. Fradella,
          President, Chief Executive Officer
          and Director



     By:  /s/Michael E. McGinnis                        Dated: January 12, 1998
          ---------------------------------
          Michael E. McGinnis,
          Chairman of the Board and Director



     By:  /s/J. Drennan Lowell                          Dated: January 12, 1998
          ----------------------------------
          J. Drennan Lowell,
          Vice President, Chief Financial 
          Officer and Treasurer
          (Principal financial officer)


     By:  /s/Joseph L. Vaillancourt                     Dated: January 12, 1998
          ----------------------------------
          Joseph L. Vaillancourt,
          Corporate Controller (Principal
          Accounting Officer)


     By:  /s/ Andreas O. Tobler                         Dated: January 12, 1998
          ---------------------------------
          Andreas O. Tobler,
          Director


Page 42
<PAGE>


                                        EXHIBIT INDEX
                                        --------------
Exhibit
Number       Description                                                  Page


 10.2       Renewal, Extension and Modification Revolving
             Line of Credit Note effective July 1, 1997 between
             the Company and American Eco Corporation...................   44 

 10.2       Second Amendment Revolving Line of Credit Note 
            effective September 30, 1997 between the Company
            and American Eco Corporation................................   48

 21         Subsidiaries of the Registrant..............................   49

 27         Financial Data Schedule.....................................   50



Page 43